Tried, But Failed

The S&P 500 tried to reach daylight with its run from
11:00 a.m. to 12:45 p.m. yesterday, but it turned on a dime to close below its 50-day
moving average (1227.82) at 1225.50.

A re-cross of the 50-day MA will ignite some buying, but I’m sure
everyone will be looking over their shoulders at the 1220 level. A break below that could take
the market down to 1200 in a flash.

The tech re-allocation continues, with specialty retail, drugs, and select financials holding
their own. We’re getting entry on many of our stocks, but just medium follow-through. The tape
still favors intraday trades rather than two-to-five day (or longer) positions.

A note on charts: The patterns I talk about on a daily basis are selected from daily bar charts. I then
use three-year and monthly charts for trend reference and to find any inflection
points that are consistent on all three charts. Pullback and consolidation patterns during
the day refer to five-minute bar charts.

Target Stocks Of The Day  Cup-and-handle patterns in institutional momentum
stocks that look good include Amgen [AMGN>AMGN], United Technologies [UTX>UTX], and
Kohl’s [KSS>KSS].

Century Tel Enterprises [CTL>CTL] looks good if it can follow through after its re-cross and
close above its 50-day moving average. Adelphia [ADLAC>ADLAC] and LSI Logic [LSI>LSI] should
both get moving above yesterday’s high. Avery Denison [AVY>AVY] is a narrow range pattern
that will accelerate above yesterday’s high of 53. Only take the trade in the direction of the
trend; forget it if there’s a downside break.

Finally, Tricon Global Restaurants [YUM>YUM] and Qualcomm [QCOM>QCOM] are both consolidating
at their highs and have no resistance above.

Editor’s note: If you want to learn more about Kevin Haggerty’s trading strategies, click
on the link below to go to his new series of tutorial articles.