Yeah, Baby!
Tuesday was extremely light, which is the norm for election days.
This was evidenced by the 6 point narrow
range that the SPX
(
$SPX.X |
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News |
PowerRating) traded in from 11:00 a.m. ET on. NYSE volume
was 1.3 billion, a volume ratio of 57, and breadth neutral at +158. The Dow
(
$INDU |
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PowerRating) ended +1.2%, the SPX +0.5%, and Nasdaq
(
$COMPQ |
Quote |
Chart |
News |
PowerRating) +0.3%.
In the sectors, the BTK
was +2.3% on top of the previous +2.2% day, as the BBHs have popped out of the
pullback pattern to the 20-day EMA. The PPHs ended +1.8%, and the OIH +1.6%. The
SMHs declined 2.7%, hitting an intraday low of 24.67 yesterday. They have
rallied 57% low to high during this rally and have by far outperformed the +20% move
of the SPX.
As expected on a light
day after the current straight up rally, the stock screens lacked any real
indication of buying or selling pressure by the Generals in any specific sector.
I see by the early
morning green in the futures that the SPX will test the 923 .786 retracement
level early, if they hold. After that, you have the head-and-shoulder neckline
from 930 – 935, which includes a weekly pivot at 931 and a 936 Square of Nine
number. 940 – 950 has a strong confluence of resistance with the 30-week EMA at
942, a 2.0 intermediate standard deviation band at 940, while you also have the
September 945 low. The short-term trend is obviously overbought and the rally is
19 days old. Nov. 7 or 8, depending on one’s count, is an important cycle date.
The rally in July was 21 days, then the decline to the 769 low was 34 days, and
this Friday is the 21st day in this rally, which is going into the confluence of
resistance.
I see that CNBC led by
Haines is choking on the election results, as I am sure that Rather, Jennings,
Brokaw, the New York Times, Washington Post, and the LA Times will be also. How
would you like to be a fly on Streisand’s wall this morning?
As I said yesterday,
these results could carry the indices to the top of the confluence, and possibly
more. That doesn’t change the fact that the overbought condition must be
resolved first with enough pullback to give the indices a chance to enter a Wave
Three in the current move. On the monthly and weekly charts, this is a
retracement back to a declining moving average. This is the fifth up week if you
count the initial low week, so you can rest assured there will be imminent
pullback of a week or more.
After that, and they
start to roll the ball on elimination of double taxation, and probably
incentives for corporations to increase capital spending, along with tax cut
legislation, it could mean a strong Wave Three move, if successful, which forces
many of the money managers off the sidelines because no one managing money can
afford to miss a significant move after the three-year negative performance
during this bubble-bursting bear market.
Have a good trading day.
Five-minute chart of
Tuesday’s SPX with 8-, 20-,
60- and 260-period
EMAs
Five-minute chart of
Tuesday’s NYSE TICKS