Here's What To Do In This Upper End Of Resistance

Yesterday certainly traded like a pre option expiration day, which is this Friday. Lots of choppiness, spurts of machine buying and selling, while the $2 brokers just stood around their posts on the NYSE floor, not working any orders of size and the overall NYSE floor was very quiet.

The movement in the major indices was small, as the  SPX ($SPX.X | Quote | Chart | News | PowerRating) was -0.3% closing at 942.30, the Dow ($INDU | Quote | Chart | News | PowerRating) -0.5%, Nasdaq ($COMPQ | Quote | Chart | News | PowerRating) -0.1%, and the QQQ (QQQ | Quote | Chart | News | PowerRating)  -0.4%, closing at 28.72, right at that six month, 2.0 standard deviation band again. The SMH closed at 28.25, -1% and the OIH were +2.3% as crude rose. Also, some internet stocks had some more upside.

NYSE volume seems to be locked in a zone with 1.38 billion shares yesterday, volume ratio was nondescript at 49, and breadth was a push at just -38. Didn't tell us anything. It was another narrow range day for the SPX at just 8.6 points as the average implied volatility -- which you know as the AIV on the volatility sheets -- remains below 20 and hasn't been above 20 since April 21.

The 820 Trend Method remains in very positive territory with the weekly, daily, and 60-minute all in sync as this upper resistance is tested in the major indices. In spite of the narrow range yesterday, the SPX gave us a trade from the intraday highs which was clearly defined. Early on, the SPX traded down to the .38 retracement to the Monday low of 929.30, which was 9:40. It bounced twice off of 939.74 and 939.36, but didn't run much and was locked in a range between 944.20 and 938.36. It broke out of this range on the 11:55 AM bar to an intraday high of 947.51. This set up a 1,2,3 higher top pattern, which was also an RST. There was a Kings and Queens short entry below 946.54 which ran down to the 938.91 intraday low and just above the 240 EMA. The Dow hit right on its 240 EMA. The 2:25 PM bar was a hammer signal bar for a buy-side RST -- or, just to cover your short -- with entry above 940.24, but this trade only carried to 942.32 in the last 1 1/2 hours with the SPX closing at 942.30.

If you get any good intraday short setups in this upper end of resistance, you take them, unless the dynamics that day are overwhelmingly strong, and yesterday they obviously were not. When you get retracements to the 240 EMAs you are alert for any buy setups and should remain that way until the 820 Trend Method goes negative

There is the retail sales figure this morning, so maybe that will create some of that artificial futures action that these these economic numbers normally give us, setting up our first hour reversal strategies

If the program gang has an active option expiration agenda today, we could see some more travel range for the major indices.

Have a good trading day.

Kevin Haggerty

PS Spend a full weekend with me June 20-22.  Click here for details.
 

Five-minute chart of yesterday's SPX with 8-, 20-, 60- and 260-period EMAs

Five-minute chart of yesterday's NYSE TICKS