You Had To Take This Trade!
What Wednesday’s Action Tells
You
The SPX
(
$SPX.X |
Quote |
Chart |
News |
PowerRating) and Dow
(
$INDU |
Quote |
Chart |
News |
PowerRating)
started soft and down yesterday, hitting their early lows around 10:00 a.m.
ET,
then reversed with trend up from there to new closing highs for this rally
at
1147.62 for the SPX and 10,624 on the Dow. The SPX was +0.8% and Dow
+0.9%.
Stocks that had led the Dow down on Tuesday,
(
MMM |
Quote |
Chart |
News |
PowerRating),
(
UTX |
Quote |
Chart |
News |
PowerRating) and
(
CAT |
Quote |
Chart |
News |
PowerRating),
all reversed and led it up yesterday. Diverging from the SPX and Dow were
the
Nasdaq
(
$COMPQ |
Quote |
Chart |
News |
PowerRating) -0.3% and
(
QQQ |
Quote |
Chart |
News |
PowerRating)s -0.4%. It’s never good when they
don’t dance together.
NYSE volume was 1.76 billion yesterday, a high
since the Jan. 8 volume of 1.86 billion. The NYSE volume average jumped up starting
the new year and has steadily increased to support higher prices. Rising prices
and volume is always good. The 4 MAs of volume ratio and advances/declines have
not been as strong as the SPX price rise, which tells me the herd is chasing
a smaller selection of stocks, but that also has something to do with the rotations
we have seen in the various sectors and groups. This rotation is good for traders.
| size=2> |
Thursday
1/15 |
Friday
1/16 |
Monday
1/19 |
Tuesday
1/20 |
Wednesday
1/21 |
| color=#0000ff>Index | |||||
| color=#0000ff>SPX | |||||
| color=#0000ff>High |
1137.11
|
1139.83
|
H
|
1142.93
|
1149.21
|
| color=#0000ff>Low |
1124.50
|
1132.05
|
1135.40
|
1134.62
|
|
| color=#0000ff>Close |
1132.05
|
1139.83
|
O
|
1138.76
|
1147.62
|
| color=#0000ff>% |
+0.1
|
+0.7
|
-.09
|
+0.8
|
|
| color=#0000ff>Range |
12.6
|
7.8
|
L
|
7.5
|
14.6
|
| color=#0000ff>% Range |
63
|
100
|
45
|
89
|
|
| color=#0000ff>INDU |
10554
|
10601
|
I
|
10529
|
10624
|
| color=#0000ff>% |
+0.1
|
+0.4
|
-0.7
|
+0.9
|
|
| color=#0000ff>Nasdaq |
2109
|
2140
|
D
|
2148
|
2142
|
| color=#0000ff>% |
-0.1
|
+1.5
|
+0.3
|
-0.3
|
|
| color=#0000ff>QQQ |
38.18
|
38.56
|
A
|
38.55
|
38.39
|
| color=#0000ff>% |
+0.3
|
+1.0
|
-.05
|
-0.4
|
|
| color=#0000ff>NYSE |
|
Y
|
|||
| color=#0000ff>T. VOL |
1.67
|
1.72
|
1.7
|
1.76
|
|
| color=#0000ff>U. VOL |
849
|
1.25
|
1.09
|
1.03
|
|
| color=#0000ff>D. VOL |
814
|
447
|
594
|
721
|
|
| color=#0000ff>VR |
51
|
74
|
65
|
59
|
|
| color=#0000ff>4 MA |
57
|
60
|
66
|
62
|
|
| color=#0000ff>5 RSI |
69
|
77
|
73
|
82
|
|
| color=#0000ff>ADV |
1638
|
1894
|
2062
|
2071
|
|
| color=#0000ff>DEC |
1661
|
1392
|
1257
|
1218
|
|
| color=#0000ff>A-D |
-23
|
+502
|
+805
|
+853
|
|
| color=#0000ff>4 MA |
+489
|
+402
|
+618
|
+534
|
|
| color=#0000ff>SECTORS |
|
||||
| color=#0000ff>SMH |
+1.2
|
+0.4
|
-0.2
|
-2.5
|
|
| color=#0000ff>BKX |
+0.8
|
+0.3
|
+.01
|
+1.5
|
|
| color=#0000ff>XBD |
+1.2
|
+2.2
|
+1.6
|
+1.6
|
|
| color=#0000ff>RTH |
+0.7
|
-0.2
|
-1.0
|
+1.2
|
|
| color=#0000ff>CYC |
-.07
|
+0.5
|
-0.3
|
+2.0
|
|
| color=#0000ff>PPH |
+.05
|
-0.3
|
+0.1
|
+1.7
|
|
| color=#0000ff>OIH |
-1.7
|
+2.3
|
+4.3
|
+0.3
|
|
| color=#0000ff>BBH |
+0.8
|
+1.4
|
-0.3
|
+1.5
|
|
| color=#0000ff>TLT |
+0.4
|
-0.7
|
-.07
|
+0.2
|
|
| color=#0000ff>XAU |
-4.0
|
+1.2
|
+2.4
|
+0.3
|
^next^
The major sectors all finished green yesterday,
except semiconductors, where the
(
SMH |
Quote |
Chart |
News |
PowerRating) was -2.5%. The homebuilders, which
had retraced to their 89-day EMAs, declining 15% – 20%, all bounced yesterday
on the 8:30 a.m. “best in 25 years” reports. These reports also pushed
other related basic industry stocks higher. In addition to the semis, the networkers
and communication equipment stocks also took a hit after their recent spikes
up. With all of the hedge funds in the game now, it means lots of volatile action
and shorter time horizons. Rotation in and out of groups is excellent for the
daytrader, as you have seen most recently in the semis and homebuilders.
For Active
Traders
In yesterday’s trading, any initial shorts
below
the previous day’s lows in the Dow and SPX were reversed with small profits
or,
at worst, scratched, i.e., the
(
DIA |
Quote |
Chart |
News |
PowerRating) broke the 105.53 previous low, then
traded down to 105.05 by 10:00 a.m., and then it was trend up into the
106.34
close. If you took the initial short, no problem, and certainly good if you
covered and went long. The obvious long entries for the DIA were both Slim
Jims.
The first one above 105.60 with entry on the 12:20 p.m. bar and above all of
its
EMAs, then another one above 105.95 with entry on the 1:45 p.m. bar running
up
to the intraday high of 106.64, closing at 106.34. No talent needed on those
two
Slim Jims, just scrolling your charts to find them.
The SMH was the best setup, in spite of
the -2.5%
day. The SMH gapped down on the open from 45.25 to 44.73, then traded
straight
down to a 43.74 low, which was right at the 2.0 volatility band of 43.85 and
also the 20-day EMA of 43.58. You had to sit with them, but they traded up
to
44.43, then faded a bit, closing at 44.06. With the SPX and Dow both
advancing,
it was highly probable the SMH would have a contra move from the 2.0
volatility
band zone. The trade had to be taken because the initial stop was so close
to
entry.
Today’s
Action
With the SPX and Dow in these current
retracement
zones, any intraday short setups will also be taken, and the semis, after
yesterday’s decline, will be a focus for any snapback moves,
Have a good trading day,
Kevin Haggerty
