With The Red Open, Have Your Trap Door Hats On
All of
you 1,2,3 traders caught a good move yesterday
that ran 10 points from entry. The SPX
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PowerRating) opened green and made a quick run up to 857.37 by the 10:20 a.m.
ET bar, then quickly retreated to the intraday trading low of 848.56. That low
became the 1 point. Entry was above the signal bar high of 850.75, which was a
three-bar pullback and close in the top of the range, and also an inside-bar
setup after the appropriate Fib pullback as you can see on your five-minute
chart. This became a bigger 1,2,3 higher bottom pattern with the new 2 point
high at 853.71 on the 11:50 a.m. bar, and the signal bar being the 12:30 p.m.
bar, which was an outside bar with a close in the top of the range. Entry was
above 850.89. The pattern originated at the 850 level, which has confluence as I
showed you in the previous daily SPX chart.
The SPX intraday high was
860.76, right at the 260 EMA on the five-minute chart and 861.45 is the .50
retracement between 954.28 and 768.68 which is the October low. Both the
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PowerRating)s also gave you 1,2,3 higher bottom entries.
NYSE volume yesterday was
1.46 billion, a volume ratio of 74, and breadth +855. The major indices all
gained about 1.3%. The futures started out strong red following Bush’s speech,
which was very pointed regarding Iraq, but they have improved somewhat as I do
this at 8:00 a.m.
As traders, our concern
this morning is the emotional level price gets to and how you will play it. The
major indices will discount Iraq in price well before it starts, with the “X”
factor, I assume, being some extraordinary biological response against us here
at home. A significant emotional decline will bring the longer-term standard
deviation bands into play, which has the 2.0 band at 805 and 3.0 at 780 for the
SPX. The head-and-shoulder measurement down for the SPX is about 795. As you
know, the FTSE has already broken its October lows.
With the early red, there
is not much more to say. You have your Trap Door hats on as the S&P futures are
almost at the 840 level, which is the .618 level to the October low. Last
night’s SPX close was 858.54 with an intraday low of 844.25. Yesterday’s SPX
high reversal bar was right at the 20-period EMA on the 60-minute chart which
now becomes the significant swing point high for the intraday longer-term trend.
As I finish this up, I am sorry to say that the S&P futures are only down 7
points instead of the previous 13 or so. But there are one-and-a-half hours till
the opening, and as we all know, things can change.
Have a good trading day.
Five-minute chart of
Wednesday’s SPX with 8-, 20-,
60- and 260-period
EMAs
Five-minute chart of
Wednesday’s NYSE TICKS