Winding Down The Year With An Awareness Week
NYSE
volume was once again about average
at 1.37 billion, a volume ratio of 29,
for a three-day moving average of 26 which is short-term oversold, while breadth
improved to -282 from -1015 the previous day and is also a three-day oversold
moving average of -664. The SPX
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PowerRating) declined -0.8%, the Dow
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PowerRating) -0.5%. The SPX closed at
884.24, right at the .38 retracement level of 883.36 and below the recent
eight-day trading range which now becomes resistance. All of the major sectors
were down about the same as the major indices, except the OSX which was +0.4%
This is a cycle week from
which to expect a rise into year end, as 12/19 was a major turn day, but this is
an awareness time period, and the train has to reverse direction in order for us
to capitalize on it. The
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the 22.54 .618 retracement to the 17.32 October low. This low was the signal bar
yesterday after a knife down from the 23.90 intraday high on the 10:05 a.m. ET
bar. It was a perfect sharp emotional decline which most often sets up a contra
intraday move when approaching a key awareness zone. You had a confluence of the
.618 retracement, of the 22.54 number, and the 1.618 Fib extension from the
23.30 swing point low on Dec. 18, and yesterday’s 23.90 high. This number was
22.78. It was a confluence in a high-probability zone with a signal bar and
change-in-direction entry. These are the kind of trades you must always take. It
only advanced to 23.36 before closing at 23.25, but gave you room if you carried
it in position to play any anticipated upside reflex into the holiday.
As you know, I’ve
thought, and still do, that the major indices would have to retrace more than
.38 to the 769 low just as the semis have done. But that hasn’t happened yet,
despite what I think is some pretty heavy news, including a new hurdle for the
Republicans which had better enact some positive legislation soon as the lefties
send out the attack dogs.
Today and Monday is it
for me on the year, and I will only play in the index proxies or HOLDRs,
especially the SMHs. I will continue to short retracements back to resistance in
the
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PowerRating)s, which are the long-term bond proxies. With Christmas Eve — yes,
in spite of what the ACLU says — on Tuesday followed by the Christmas Day
holiday on Wednesday, it breaks up much of the year-end action. I prefer to be
long into Tuesday, so I’m not looking at the short side at all until after the
holidays.
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