Your First Trade Opportunity Today
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What Thursday’s Action Tells
You
After the initial opening move up into the 10:00
a.m. bar ET, the major indices had a contra move (90% – 60% rule) to their intraday lows before the Generals made sure that the SPX
(
$SPX.X |
Quote |
Chart |
News |
PowerRating)
closed
above 1111.92 to 1114.57 vs. the previous day’s 1114.80 close.
(
MRK |
Quote |
Chart |
News |
PowerRating)‘s
decline on the VIOXX pull was obviously more of a drag on the Dow
(
$INDU |
Quote |
Chart |
News |
PowerRating)
which ended at -0.6% to 10,080.
NYSE volume expanded on the last day of the
quarter to 1.75 billion, with the volume ratio 61 and breadth lagging at
+662
which again highlights the concentration of volume in the big-cap index
stocks.
The CYC led the sectors at +1.1%, as the
(
TLT |
Quote |
Chart |
News |
PowerRating) — the long bond proxy — declined for the third day in succession
at
-0.4% and is -1.8% for the three days.
The negative divergence between the Dow
Industrials and the Dow Transports and Utilities continues, so that has the
Dow Theory followers on edge. The Dow
closed yesterday again below its 200-day EMA of 10,101 with the 200-day SMA
up
at 10,297. The Transports and Utilities are both above all the lines having
made
new rally highs.
Complacency remains high as measured by the
low
VIX, which is not what bottoms are made of. The next key time zone is the
third
week in October, and if it is a bottom, then there will be a good long
opportunity into year-end.
For Active
Traders
Yesterday’s travel range was a pleasant
surprise
even though the major indices did little at day’s end. I have included both
the
NQ and SPX five-minute charts highlighting the defined trades. The NQ hit
its
1422.50 high on the 10:00 a.m. bar and right at the 1.618 Fib extension of
the
last leg down. This set up the RST sell entry with the 1 point at 1415 (1S).
The
NQ traded down to its 240 and 480 EMAs at 1407.50 with the 1.272 extension
at
1407.87. The reversal from this sequence was also an RST buy pattern with
the 1
point at 1412 (1B). It traded to 1419.50,
then
pulled back to 1416 and then went on to make a 1422 high before closing at
1416.50. This was sequence at its best and is all explained in the
Sequence
Trading Module.
The SPX chart outlines the other major
reversal
pattern yesterday, which in this trade is the 1,2,3 Higher Bottom. The SPX
went
on to make an 1116.31 intraday high, closing at 1114.57. Two longs and a
short,
not a bad day.
Today’s
Action
The futures are already up strong green at
8:30
a.m. with the
(
QQQ |
Quote |
Chart |
News |
PowerRating) and
(
SMH |
Quote |
Chart |
News |
PowerRating) trading up in the pre-market games.
The
media and empty suits are hyping today’s economic reports, which includes
the
ISM. This all means that Trap Doors will be the first trade opportunity
today.
Have a good trading day,
Kevin Haggerty
