Why You Should Let The Action Come To You
Not
exactly a dynamic day, but
there was a move up from the levels we were ready for by the major indices and
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51, and breadth at +410. The volume in the
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at 5.4 million were also on the light side. The major indices managed a green
day, with the SPX
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+0.9%. The SMHs closed at 23.73, +1.1%.
In yesterday’s
commentary, I said that 25.25 – 25.30 on the QQQs and 23.00 – 23.25 for the SMHs
would be good levels for possible reflexes. The SMHs hit a 23.30 intraday low on
the 9:50 a.m. ET bar, and then it was trend up to 23.87 by the 2:15 p.m. bar,
before fading to close at 23.73. The QQQs traded to an intraday low of 25.30 on
the 10:20 a.m. bar, and then trended up to an intraday high of 25.77, and closed
at 25.69. That was a +1.9% rally for the QQQs and +2.4% for the SMHs from those
awareness levels. I would imagine most of you caught some of that move.
The SPX made an intraday
low of 862.76, then rallied up to an 871.57 close. The 1.618 Fib extension was
863.89, the 2.0 861.33, and the .50 retracement mentioned in yesterday’s
commentary was 861.45. In this corner, it was stopped out on the first two RST
buy entries, but also took the third because it was at that good level. Same
with the QQQs and SMHs. The answer to your question is yes, it’s tough to stay
with slow-moving trades, but the moves from the levels off the intraday lows
didn’t threaten your initial stops.
The QQQs ended in a
closing range of 25.77 – 25.58, and the 240 EMA on the five-minute chart is at
the 25.80 level. The 240 is the same as the 20 EMA on your 60-minute chart. I
repeat that often because new readers of my morning rag always e-mail me on
that. The SMHs had a closing range of 23.86 – 23.57, with the 240 EMA at 23.89.
The close was 23.73, so for both the QQQs and SMHs, we have some near overhead
resistance to navigate, and it might provide us with a short setup at those 240
EMAs. The 240 EMA for the SPX is about 873, which is right at that 870 – 875
magnet level of resistance that has been a magnet both ways. I am doing this
Thursday night for Friday morning, so I am just laying out the initial
action/reaction plan for the early trading.
In the major sectors
yesterday, the oil services led on an upgrade, and the retailers also
outperformed the major indices, as stocks like
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KSS |
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TGT |
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PowerRating) and
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LLW |
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PowerRating) all had strong days.
The SPX is churning in a
60 point trading range for the past 14 trading days, having made two runs at the
higher-end resistance. The first to 896 and then back to 844, then the feel-good
war spike on Monday to 905. It closed yesterday at 871.57. I don’t get
interested from a position standpoint until those lower levels mentioned
yesterday, or a push up toward the 900 – 925 zone. In the meantime, sit back and
let the action come to you, then you can react when there is some kind of an
edge.
Have a good trading day.
Five-minute chart of
Thursday’s SPX with 8-, 20-,
60- and 260-period
EMAs
Five-minute chart of
Thursday’s NYSE TICKS