You Had Every Reason To Take This Trade Yesterday
What Monday’s Action Tells
You
The most important aspect of yesterday’s
market
action was volume and the continued divergence of the semiconductors, as the
(
SMH |
Quote |
Chart |
News |
PowerRating) rose for the 5th day in succession, up +1.0% yesterday and +4.6%
for
the past five days. The primary semi focus was rewarding with this move
coming
off the 34.50 05/03 low vs. the .236 retracement to the October 2002 17.32
low
and an RSI of just 12. The last three days have been on rising volume of
18.9
million, 30.7 million and 35.5 million yesterday. The last two days, the SMH volume
was
the most since the SMH started to trade, so you can bet there is an agenda.
Yesterday’s high of 37.13 was just below the 20-day EMA at 37.31.
The SPX
(
$SPX.X |
Quote |
Chart |
News |
PowerRating) closed at
1087.12, -1.1%,
hitting an intraday low of 1079.63 at the top of the expected price zone.
The
May 1200 SPX calls were covered for the fourth month of premium gain. They
were
written vs. the long LEAP calls on the 1145 – 1147 retracement back to the
resistance zone on 04/26 – 04/27. The synthetic straddles had significant
profitable adjustments and 50% of the position taken off yesterday when
price
got down to that 1080 zone. The Dow
(
$INDU |
Quote |
Chart |
News |
PowerRating) closed at 9990, -1.3%, the
Nasdaq
(
$COMPQ |
Quote |
Chart |
News |
PowerRating) 1896, -1.1%, having traded down to an 1880 low. The
(
QQQ |
Quote |
Chart |
News |
PowerRating) went out at 34.67, but did hit 34.90 on a rally from the 34.42
intraday low.
NYSE volume exploded to 1.91 billion, the
volume
ratio just 15, and the financial-laden breadth -2746. The 4 MA of the volume
ratio is now 26 and breadth (artificial flavor) -1941. Net net, the key time
zone (05/03 – 05/07) has proved to be very significant. The next key time
zone
is 06/15, plus or minus a couple of days.
| Â | Tuesday
5/4 |
Wednesday
5/5 |
Thursday
5/6 |
Friday
5/7 |
Monday
5/10 |
Index |
|||||
| SPX Â |
|||||
High |
1127.74 | 1125.07 | 1121.53 | 1117.33 | 1098.70 |
Low |
1112.89 | 1117.86 | 1106.20 | 1098.63 | 1079.63 |
Close |
1119.51 | 1121.58 | 1113.96 | 1098.69 | 1087.12 |
%Â |
+0.2 | +0.2 | -0.7 | -1.4 | -1.1 |
Range |
14.8 | 7.2 | 15.3 | 18.7 | 19.1 |
% Range |
45 | 52 | 51 | 0 | 39 |
INDUÂ |
10317 | 10311 | 10241 | 10117 | 9990 |
%Â |
+.03 | -.06 | -0.7 | -1.2 | -1.3 |
Nasdaq  |
1950 | 1957 | 1937 | 1918 | 1896 |
%Â |
+0.6 | +0.4 | -1.0 | -1.0 | -1.1 |
| QQQÂ |
35.25 | 35.53 | 35.26 | 34.97 | 34.67 |
%Â |
+0.4 | +0.8 | -0.8 | -0.8 | -0.9 |
NYSEÂ |
|||||
T. VOLÂ |
1.67 | 1.47 | 1.51 | 1.65 | 1.91 |
U. VOLÂ |
1.04 | 811 | 297 | 182 | 276 |
D. VOLÂ |
603 | 635 | 1.20 | 1.45 | 1.62 |
VRÂ |
63 | 56 | 20 | 11 | 15 |
4 MAÂ |
45 | 53 | 51 | 37 | 26 |
5 RSIÂ |
45 | 49 | 37 | 23 | 17 |
ADVÂ |
1904 | 1638 | 635 | 259 | 353 |
DECÂ |
1398 | 1647 | 2720 | 3184 | 3099 |
A-DÂ |
+506 | -9 | -2085 | -2925 | -2746 |
4 MAÂ |
-235 | +157 | -226 | -1128 | -1941 |
SECTORSÂ |
|||||
SMHÂ |
+1.7 | +0.4 | +0.3 | +1.2 | +1.0 |
| BKXÂ |
+0.6 | +.06 | -1.3 | -2.4 | -1.6 |
XBDÂ |
+0.8 | -0.5 | -1.9 | -2.7 | -0.5 |
RTHÂ |
-0.5 | +0.3 | -1.9 | -2.1 | +1.0 |
CYCÂ |
+0.7 | -.05 | -1.6 | -2.5 | -1.7 |
PPHÂ |
+0.4 | +0.3 | +0.2 | -0.6 | -1.5 |
OIHÂ |
-0.9 | -1.4 | -1.8 | -2.9 | -2.9 |
| BBHÂ |
-1.1 | +1.9 | -2.0 | -1.8 | -1.4 |
TLTÂ |
-0.7 | -0.3 | -0.3 | -1.3 | -0.2 |
| XAUÂ |
+5.3 | -2.2 | -2.6 | -4.3 | +2.4 |
^next^
For Active
Traders
If you trade the S&P futures or
(
SPY |
Quote |
Chart |
News |
PowerRating), you
got a first-hour strategy yesterday, which was the gap pullback short, as
the
SPY opened down at 109.44 from the previous 109.96 close. The gap pullback
was
to 109.74. There was a significant increase in volume on the 109.74 bar, as
range narrowed with the 200-day EMA of 108.39 and SMA at 108.15 waiting for
price to say hello. The SPY declined to 108.36, then re-crossed the 200-day
EMA
to the upside and ran to 109.53 before fading and closing at 108.83. The
three-month 2.0 standard deviation band was just below at 108.30. You had
every
reason to take the trade in the SPY or future.
Today’s
Action
The 05/03 commentary has the confluence of
the
1080 – 1065 zone outlined, so that continues to be your SPX reference on
weakness. The early futures are green, but if that reverses to new SPX lows
into
the zone, then price will be played from the long side following the -3.2%
decline the past three days. You RST players caught the SMH rally nicely,
but
the stop should now be at a minimum of breakeven, but those of you that got
in
early, below 35, obviously have profits you probably should have taken
already.
You are looking at similar RSTs in progress for the SPY,
(
DIA |
Quote |
Chart |
News |
PowerRating) and
(
IWM |
Quote |
Chart |
News |
PowerRating). Early intraday setups would be best because of the wide-range bar
price yesterday, and a close that was too far away from the high.
The IWM hit a 3.0 standard deviation band
(three-month) yesterday which is about 106.50. The SPY 2.0 band is just
above
108, which was another reason to take the long trade yesterday, with the 3.0
band at about 106.30 which is equivalent to the low end of the SPX zone that
we
had anticipated. I will cover all of this at the June 25 – 27 seminar in New
York at the Waldorf Astoria.
Have a good trading day,
Kevin Haggerty
Â
