Short-Term Oversold -- Be Ready
Enviado: 18/7/2003 17:57TradingMarkets.com
Short-Term Oversold -- Be Ready
Friday July 18, 9:30 am ET
By Kevin Haggerty
What Thursday's Action Tells You
Yesterday's market action was the second day of increased volume and declining prices, as some money was taken off the table. The institutions ("Generals") were very active, and there was a rush to the exit in many stocks that have had extreme moves during this rally since March 12. NYSE volume was 1.64 billion, the volume ratio 20, and breadth at -1633. The three-day moving average of net declines is -1327, and the volume ratio three-day moving average is below 25, both of which are short-term oversold. The (CBOE^SPXNews) closed at 981.73, -1.2%, the Nasdaq (NasdaqSC^IXICNews) at 1698, -2.9%, and the QQQs (AMEXQQQNews) closed at 31.21, -3.0%. The major sectors were all red, with the exception of the Oil HOLDRs (AMEXOIHNews) at +1.2%.
The Semiconductor HOLDRs (AMEXSMHNews)s ended at 31.40, -3.4%. Intel (NasdaqNMINTCNews) gave back 1.7% from its +8.1% three-day move. QLogic (NasdaqNMQLGCNews) and Teradyne (NYSETERNews), both of which reported this week, having taken big price hits. QLGC is -11.7% in two days, and TER -13.6% in three days. Applied Materials (NasdaqNMAMATNews) was -4.7% yesterday after a +10.5% gain Monday through Wednesday. Novellus (NasdaqNMNVLSNews) lost 5.5% yesterday and is now negative on the week, including the +5.9% Monday pop. Most all of the major banks that reported earnings this week that the media hyped up are now net minus after yesterday's action. "And the beat goes on."
For Active Traders
Traders were able to successfully execute one of the excellent first-hour strategies yesterday, which was the gap pullback that resumes the direction of the opening, which was down yesterday. For example, the SPDRs (AMEXSPYNews) closed at 99.94 on Wednesday and opened down at 99.15 yesterday, followed by the highly probable contra move, with the SPY trading up to 99.57 on the 10:00 a.m. ET bar. The SPY reversed on this bar in the direction of the down opening, trading down to an intraday low of 98.16 by 3:00 p.m., closing in the bottom 25% of the range at 98.50.
The time period from 10:00 to 10:15 a.m. very often generates a good trading move. Whether you were trading the SPY or the E-minis, it was a successful day for traders, as this gap pullback trade had the added benefit of a trend down day. The downside pivot for traders, which was the 20-day EMA of 991.74 for the SPX and 99.45 for the SPY, was also re-crossed to the downside on the gap pullback short trade. See yesterday's commentary.
Today's Plan
Starting out today, the major indices are trend down three-and-a-half days since 11:00 a.m. on Monday morning following the media's earnings and economic hype. Traders should be ready for any upside reflex today. The three-day moving average of the volume ratio and breadth are short-term oversold. The SPX is at the lower band of its three-month regression channel, hitting a 978.60 intraday low yesterday, closing at 981.73 and also below the 1.0 volatility band. The 50-day EMA is below at 970.40. Any early down today in the major indices will result in a tradable intraday move to the upside. FYI: The synthetic straddle has been excellent so far due to the recent volatility, which was expected and articulated in the July 3 commentary.
Have a good trading day.
Kevin Haggerty
Short-Term Oversold -- Be Ready
Friday July 18, 9:30 am ET
By Kevin Haggerty
What Thursday's Action Tells You
Yesterday's market action was the second day of increased volume and declining prices, as some money was taken off the table. The institutions ("Generals") were very active, and there was a rush to the exit in many stocks that have had extreme moves during this rally since March 12. NYSE volume was 1.64 billion, the volume ratio 20, and breadth at -1633. The three-day moving average of net declines is -1327, and the volume ratio three-day moving average is below 25, both of which are short-term oversold. The (CBOE^SPXNews) closed at 981.73, -1.2%, the Nasdaq (NasdaqSC^IXICNews) at 1698, -2.9%, and the QQQs (AMEXQQQNews) closed at 31.21, -3.0%. The major sectors were all red, with the exception of the Oil HOLDRs (AMEXOIHNews) at +1.2%.
The Semiconductor HOLDRs (AMEXSMHNews)s ended at 31.40, -3.4%. Intel (NasdaqNMINTCNews) gave back 1.7% from its +8.1% three-day move. QLogic (NasdaqNMQLGCNews) and Teradyne (NYSETERNews), both of which reported this week, having taken big price hits. QLGC is -11.7% in two days, and TER -13.6% in three days. Applied Materials (NasdaqNMAMATNews) was -4.7% yesterday after a +10.5% gain Monday through Wednesday. Novellus (NasdaqNMNVLSNews) lost 5.5% yesterday and is now negative on the week, including the +5.9% Monday pop. Most all of the major banks that reported earnings this week that the media hyped up are now net minus after yesterday's action. "And the beat goes on."
For Active Traders
Traders were able to successfully execute one of the excellent first-hour strategies yesterday, which was the gap pullback that resumes the direction of the opening, which was down yesterday. For example, the SPDRs (AMEXSPYNews) closed at 99.94 on Wednesday and opened down at 99.15 yesterday, followed by the highly probable contra move, with the SPY trading up to 99.57 on the 10:00 a.m. ET bar. The SPY reversed on this bar in the direction of the down opening, trading down to an intraday low of 98.16 by 3:00 p.m., closing in the bottom 25% of the range at 98.50.
The time period from 10:00 to 10:15 a.m. very often generates a good trading move. Whether you were trading the SPY or the E-minis, it was a successful day for traders, as this gap pullback trade had the added benefit of a trend down day. The downside pivot for traders, which was the 20-day EMA of 991.74 for the SPX and 99.45 for the SPY, was also re-crossed to the downside on the gap pullback short trade. See yesterday's commentary.
Today's Plan
Starting out today, the major indices are trend down three-and-a-half days since 11:00 a.m. on Monday morning following the media's earnings and economic hype. Traders should be ready for any upside reflex today. The three-day moving average of the volume ratio and breadth are short-term oversold. The SPX is at the lower band of its three-month regression channel, hitting a 978.60 intraday low yesterday, closing at 981.73 and also below the 1.0 volatility band. The 50-day EMA is below at 970.40. Any early down today in the major indices will result in a tradable intraday move to the upside. FYI: The synthetic straddle has been excellent so far due to the recent volatility, which was expected and articulated in the July 3 commentary.
Have a good trading day.
Kevin Haggerty