Fresh Start
After a week of big-swing volatility, the bottom line is the Dow dropped 2.5%, the S&P 2.1%, the NASDAQ 2%, and the Dow Transports 3.8%. The Philadelphia Electric Utility Index (UTY), which, along with the long bond, is a good barometer of the interest rate environment, gained 1.4%; there doesn’t seem to be too much concern about an interest rate hike.
Energy and utilities were the only sectors that rallied last week. Techs, brokers, banks and specialty retailers made some good moves on Friday, but most major groups ended last week down 4-7%. The consensus expects a rally this week–I hope they’re correct. I only have minor expectations; I only hope the S&P accelerates to its 50-day exponential moving average of 1317 if it gets past 1305. If that happens, many stocks will go with it.
When you’re a short-term trader, “long-term” means after lunch, so predictions don’t make you much money–reacting to high-probability situations with good market dynamics does, if you manage risk. What you look at to manage your mutual funds is not the same as what you look at for your short-term trading. We just want to know if the elephants are in the market and when we can ride them.
Target Stocks Of The Day  On Friday, some of the stocks that set up didn’t have their usual volume, but they are developing the kinds of patterns institutions like when they want to add to positions (and where hedge funds like to get involved ahead of them). If they come for them today, the following stocks are in good position for entry: Lucent [LU>LU], Microsoft [MSFT>MSFT], Cisco [CSCO>CSCO], and Sun Microsystems [SUNW>SUNW]. I like all these stocks crossing their 50-day moving averages.
If they come for the energies today, Schlumberger [SLB>SLB], and Halliburton [HAL>HAL] are both narrow-range setups ready to go; Qualcomm [QCOM>QCOM] is another narrow-range setup. Other continuation patterns include Computer Sciences [CSC>CSC], Tellabs [TLAB>TLAB], and Ascend Communications [ASND>ASND].
Program trading numbers  Buy: 4.65. Sell: 1.20. Fair Value: 2.80.
Remember: Wait to see what they’re going to do, don’t try to predict it–that costs you money.
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.