Bottom Of The Box

The Nasdaq 100 (NDX | Quote | Chart | News | PowerRating) put the rush on yesterday as it rallied to 1768.60, backed off to 1754, then made a 1,2,3 higher high, running to 1774, giving short entry when it reversed 1768.60. The index sold down to 1740 after entry and closed at 1751.22. 

I will post a chart on Monday as the purpose of this commentary is education and this is a good example for your records. I will also include the SPX chart as it made a 1,2,3 lower high, diverging negatively from the NDX. It was late in the day and the NDX only gave you about a 65 cent run in the (QQQ | Quote | Chart | News | PowerRating)s, and the S&P 500 (SPX | Quote | Chart | News | PowerRating) only a few points, which was nothing if you used SPYs.

Using 1226 yesterday as a pivot was a lay up, and a good example of "Sequence Trading" which I will expand on in Las Vegas. We had many trade-through entries from yesterday's list but the financials were the best of the litter for the second day of strong gains. Why no brokerage stocks this week? Answer is: Backed off because they were all reporting earnings this week. In hindsight, a missed opportunity because of the continuation entries after (LEH | Quote | Chart | News | PowerRating)'s 3.5 point gap opening on Monday. You will get another chance after the pullback-from-the-announcement thrust, provided the Generals really want to buy them rather than trade them.

The SPX ran to 1240 yesterday, backed off, and closed at 1237.04. Looking at the five-minute chart, I'm thinking "heads up below 1234, then does anybody show up on the buy side between 1231 and 1226?" If it trades below 1226, then reverses to the upside, plan to take the long entry unless it is an obvious program and the market dynamics are ugly. 

What other key levels should be on your alert list today? I will be looking at 1217 to 1221, which are the Fib retracements to Tuesday's 1207.73 low. Positive action would be to reverse the 1226 number to the upside from a reversal pattern in that retracement zone. The point of the exercise is to anticipate it and to plan it. 

Stock touts are a dime a dozen -- and not even worth that dime -- so learn the basic essentials which will hold you steady through all kinds of markets. Back off from your oscillators, indicators and commentators while you concentrate on recognizing the buying/selling pressure and Change in Direction or continuation patterns that continue to repeat in all kinds of markets. The rest of it just confirms what you see.

Yesterday was a huge NYSE volume day at 1.5 billion with a volume ratio improving to 62 and advancers over decliners by +386. The Nasdaq had less of a relative volume increase but still big at 2.1 billion which equates to 1.05 billion in NYSE volume. The volume ratio was 64. Hopefully, this indicates a push higher into the upper end of the box resistance for both the SPX and NDX.

Stocks Today

We'll have to see if the Generals give us a hat trick for the third day in a row in the financials. Focus on: (SNV | Quote | Chart | News | PowerRating), (FITB | Quote | Chart | News | PowerRating), (CCR | Quote | Chart | News | PowerRating), (AIG | Quote | Chart | News | PowerRating), (CB | Quote | Chart | News | PowerRating), also (CMA | Quote | Chart | News | PowerRating), (SPC | Quote | Chart | News | PowerRating), (FRE | Quote | Chart | News | PowerRating), (FNM | Quote | Chart | News | PowerRating) (both of them -- see if the Generals can push them to new highs), (BSC | Quote | Chart | News | PowerRating), (COF | Quote | Chart | News | PowerRating), (PVN | Quote | Chart | News | PowerRating), and (MTG | Quote | Chart | News | PowerRating).

In the biotechs: (BGEN | Quote | Chart | News | PowerRating), (HGSI | Quote | Chart | News | PowerRating) and (DNA | Quote | Chart | News | PowerRating) (both above Wednesday's high), (IMCL | Quote | Chart | News | PowerRating) (which is a very unusual pattern), (CEPH | Quote | Chart | News | PowerRating), (MEDI | Quote | Chart | News | PowerRating) and (ENZN | Quote | Chart | News | PowerRating).

In the semis, which obviously are going to be very active due to MU's negative news last night, look for intraday setups in: (NVLS | Quote | Chart | News | PowerRating), (KLAC | Quote | Chart | News | PowerRating), (NVDA | Quote | Chart | News | PowerRating) and (BRCM | Quote | Chart | News | PowerRating) -- and obviously you can include (MU | Quote | Chart | News | PowerRating) on there. (Volatility Bands, anybody?)

Other stocks: (EDS | Quote | Chart | News | PowerRating), (UL | Quote | Chart | News | PowerRating), (BMET | Quote | Chart | News | PowerRating), (VZ | Quote | Chart | News | PowerRating), (AVIR | Quote | Chart | News | PowerRating) and (TYC | Quote | Chart | News | PowerRating).

Have a good trading day.

Thursday's NYSE TICK five-minute chart