Why The 200 EMA Is Significant Here
The
SPX
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$SPX.X |
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PowerRating),
(
QQQ |
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(
SMH |
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EMAs, while the Dow
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27.52 vs. its 26.55 200-day EMA as of the close, but had yet to trade below it
previous to that. The 820 intraday trend method using your 60-minute chart is
again all positive for the major indices and SMHs. The price move was excellent
yesterday, while volume was below average. The SPX ended the session at +1.8%,
the Dow +2.0%, Nasdaq
(
$COMPQ |
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PowerRating) +1.9%, QQQ +2.1% and SMH +2.4%. NYSE
volume was just 1.26 billion, but it was one-sided, as the volume ratio was 87,
and breadth +1606.
Institutions certainly
didn’t sell heavily on the re-cross of the 200-day EMA to the upside. If you
bought the SPX re-cross of the 905.42 200-day EMA with either
(
SPY |
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PowerRating) or
futures, then you probably went out long, as the SPX closed at 914.84. The
current rally high is 919.74, while yesterday’s intraday high was 918.15. The
close was also above the 1.0 volatility band of 907.73. The Nasdaq Composite
closed at 1462.24 vs. its rally high of 1468.08, so like the SPX, it is within
striking distance. The QQQ closed at 27.52 and is trying to take out that 27.75
rally high. The SMH closed above the 26.35 200-day EMA at 26.50 with the rally
high at 27.78. The Dow is lagging the tech-laden indices, closing below its
200-day EMA with its magnet up at 8526.
The SPX didn’t decline
any further than its previous close of 898.81 yesterday, so the .382 retracement
to the 862.74 low of 898, which was also minor support of the recent ascending
triangle breakout, gave us a reflex up. I get suspect after only two retracement
days, but right now I have to respect the index prices above their 200-day EMAs
until proven otherwise. They now become support and also downside pivots.
Tuesday is a travel day
for me, so I am doing this commentary after the Monday close and don’t know
whether the futures are early green, but the key point is obviously to carry
through or not this week after the re-cross of the 200-day EMAs for the major
indices. Because of only a two-day retracement, there might be some intraday
swings above and below the 200-day EMA over the next few days, but you must be
ready to play the game either way around a key inflection point.
Have a good trading day.
Five-minute chart of
Monday’s SPX with 8-, 20-,
60- and 260-period
EMAs
Five-minute chart of
Monday’s NYSE TICKS