TradingMarkets.com
Early Red Triggered The 1st Hour Strategies
Wednesday March 10, 10:19 am ET
By Kevin Haggerty
What Tuesday's Action Tells You
The SPX (CBOE:^SPX - News) traded below its 20-day EMA of 1146.20 and trended down all day, hitting an 1136.85 low on the 3:20 p.m. ET bar, then closed up a few points in the last half-hour to 1140.57, -0.6% on the day. The SPX on a close-to-close basis from the high rally close of 1157.76 is just -1.5%, but after two days down, the media is fueling the fire. The 1136.85 low is right at the three-month 2.0 band. The Dow (^DJI - News) also bounced off the same 2.0 band zone, closing at 10,457, -0.7%.
NYSE volume expanded to 1.48 billion, the volume ratio was 18, with breadth -833. The down volume was almost the same as Monday's total volume. The biggest volume increase was in the SMHs (AMEX:SMH - News), the only sector green at +0.6%, following Monday's -4.1% day. The SMH traded 26.3 million shares vs. its 14.2 million average. The QQQs (AMEX:QQQ - News) closed at 35.65, -0.3% on volume of 126.2 million vs. 92.3 million average. The Nasdaq (NasdaqSC:^IXIC - News) was -0.7% and closed at 1995, back to the 89-day EMA where it was on 02/24 with a 1991 low. The current 89-day EMA is 2000, which is also the trading range support we mentioned yesterday, which is now resistance. Yesterday's low was 1993. All of the primary sectors finished red, except for the SMH.
Wednesday 3/3 Thursday 3/4 Friday 3/5 Monday 3/8 Tuesday 3/9
Index
SPX
High 1152.44 1154.97 1163.23 1156.86 1147.32
Low 1143.78 1149.81 1148.71 1146.97 1136.84
Close 1151.02 1154.88 1156.86 1147.20 1140.57
% +0.2 +0.3 +0.2 -0.8 -0.6
Range 8.7 5.2 14.5 9.9 10.5
% Range 83 97 56 2 35
INDU 10593 10588 10596 10529 10457
% +.02 -.05 +.07 -0.6 -0.7
Nasdaq 2033 2055 2048 2009 1995
% -0.3 +1.1 -0.4 -1.9 -0.7
QQQ 36.39 36.81 36.65 35.76 35.65
% -0.6 +1.1 -0.3 -2.4 -0.3
NYSE
T. VOL 1.33 1.26 1.37 1.25 1.48
U. VOL 641 783 819 372 261
D. VOL 654 438 538 866 1.20
VR 49 64 60 28 18
4 MA 57 58 52 50 42
5 RSI 58 66 69 43 32
ADV 1609 2035 2236 1394 1237
DEC 1666 1237 1075 1906 2070
A-D -57 +798 +1161 -512 -833
4 MA +584 +510 +371 +347 +154
SECTORS
SMH -1.8 +1.8 -0.9 -4.1 +0.6
BKX +0.6 -.03 +1.0 -0.4 -0.6
XBD +.02 +1.1 +0.6 -1.6 -1.6
RTH +0.7 +0.3 -.03 -0.6 -0.8
CYC -.05 -.08 +0.1 -1.3 -1.2
PPH +0.2 +0.4 +0.2 -0.2 -1.3
OIH -0.7 -0.3 -0.6 +0.2 -1.7
BBH +0.9 +0.7 +1.6 -1.5 -1.1
TLT -0.2 +0.4 +1.9 +0.6 +0.6
XAU -.09 +1.4 +2.9 -1.1 +0.1
For Active Traders
The early down in the major indices set up some good entries in the early oversold techs. There was the RST long in the QQQ above 35.68 which advanced +0.8% to 35.98, then drifted down and sideways to the 35.65 close. The SMH had a Trap Door setup on the 10:40 a.m. narrow-range signal bar with a very significant increase in volume, in fact, the second-largest volume bar of the day. The signal bar low was 39.05, right at the lower channel line of 39 on the daily chart which was shown in a previous commentary. 39 was also the 1.414 extension of the leg up from 40.40 to 43.82. The 200-day EMA is at 38.
The SMH advanced +1.5% to 39.75 on the 11:30 a.m. bar from the Trap Door entry of 39.15, and it was +1.8% from the 39.05 low. It drifted down on very light volume, and then there was a volume surge in the last hour that took it up to a 39.97 high and closed at 39.82.
INTC gave you a 1,2,3 lower bottom with entry on the reversal of Monday's 27.62 low, with entry on the 9:40 a.m. bar yesterday, which ran +1.4% to 28 by 11:40 a.m., then went sideways along with the SMHs, but followed by a good increase in volume back up to a 28.10 high and 27.99 close. To learn these strategies in detail, go to www.kevinhaggerty.com.
Today's Action
The SPX declined below its 20-day EMA, which was yesterday's commentary's start of the game. The best reversal on the SPX was off the intraday low of 1136.84 vs. its 1.28 volatility band at 1136.71, with the 1135 monthly S2 line just below. The reflex ran to 1141.75, and we start today at 1140.58. The first level on the downside would again be 1135 - 1136, so I'd look for any kind of setups there on any early weakness. The 1.0 volatility band for the SPX today is below that 1132.07.
The AIV for the SPX was 14.28 today vs. 12.56 last week, which moved the 1.0 volatility bands out to 8.5 points today from 7.5 points last week. That same expansion of implied volatility is obviously a benefit to any long synthetic straddles, in addition to the travel range of the price moves.
The 1144 - 1145 level is the first upside early test, then the 1146.20 20-day EMA. Most of the pressure will come from 1148 - 1150 today, and then you have the monthly 1152 pivot just above.
The QQQ closed at 35.65, and the first early upside test is 35.70 and 35.75, then 35.90 - 36.13, and if it's a really good move, 36.34 - 36.63 is where the most pressure is. The downside level is the same as yesterday, with the 200-day EMA down below at 34.14.
The SMH runs into its first resistance at 40.16 - 40.27, then the 40.71 level. The first downside level is 39.57, and then the 39 lower band.
Have a good trading day,
Kevin Haggerty
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