Why Time And Price Factors May Come Into Play Here

June 13, 2003
Kevin Haggerty

What Thursday’s Market Action
Tells You

The S&P futures were taken up 6.75 points in
the pre-9:30 a.m. ET NYSE opening, and as always, on very little volume. The
pre-9:30 futures market is a trader’s private joke, and price can be pushed up
or down on little volume when professionals have an agenda. The S&P E-mini
futures made a 1004.50 high just before 8:30 ET, but when the NYSE opening bell
rang, the futures traded down to 990.25, which gave traders a good long setup.
The futures rallied to 999 before 11:00 a.m., then went sideways in a 7 point
range until the late 45-minute rally into the close, where they were taken up
from 991.25, or +6.9%, to a 1000.25 close. It was the pre-9:30 mark up of 6.75
points that failed, then a choppy market into the last-hour mark up of 6.9
points. The market doesn’t tell you much with nothing but pre-market and
last-hour futures activity pushing it around.

The major sectors demonstrated no real buying or
selling pressure, as the
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rally. The CYC managed a +0.7% gain. NYSE volume yesterday was 1.5 billion, with
a volume ratio very neutral at 53, which highlights the sideways action which
dominated in time. The breadth was +488.

For Active Traders

The major indices remain above all of their 8-,
20-, 50- and 200-day rising moving averages, and in the last 16 trading days,
have had no more than a one-day reaction to the downside. The SPX, which closed
at 998.51, is extended to the upside right now almost as much as when it was
below 800. The last primary leg down was from 935 on Jan. 13 to 789 on March 12,
which was 40 trading days, and this current rally is 64 days old, or 1.618 times
that last leg down, so it is a time zone. There is a confluence of other time
and price factors that put you on red alert. There is no edge on any initial
long positions here, regardless of whether or not the Generals can push prices
up into the end of June, which gives them another positive quarter.

Active traders had the early reversal of the
futures below the 1001.25 opening-bar low which carried down to the 240 EMA on
the five-minute chart, giving you a Trap Door long setup above 994.25 on the
10:25 a.m. bar. It only ran to 999 before going sideways. There was another
pullback to the 240 EMA with a 991.25 low. The 45-minute mark up into the close
was from a consolidation right at the 240 EMA.

Today’s Plan Of Attack

The Generals didn’t come for the semis yesterday,
but there were some decent Trap Doors in
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yesterday’s list, along with good trade-through entry in
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PowerRating), which
gained +2.3%, but still leaving it in a good pattern for today’s list.
Professionals are sitting on big profits in the semis, and most of them had
nothing more than inside days yesterday, so you have to be ready if the prices
are pushed up again by the Generals and/or hedge funds. There will be musical
chairs to the downside when they rush to the exits together.

I have included the chart today of the SMH mark
up into the close on Tuesday, and then the excellent Trap Door that set up on
Wednesday morning. There are lots of games being played in the semis and
biotechs, so focus must remain there today both ways for active traders.Â

Have a good trading day.