Extended Semis

  • March 7, 2001
  • Kevin Haggerty

The Nasdaq 100
[NDX|NDX] gapped up 3.4% on the open yesterday, and ran to an intraday
high of 2029 by the 1:50 p.m. bar, before fading to close at 1976. There was a
tradable retracement off the opening move with entry on the 12:50 p.m. bar. In
four days, the NDX has rallied +10.4% from the 1838 low to yesterday’s 2029
high. The
S&P 500
(
SPX |
Quote |
Chart |
News |
PowerRating) has gained 4.4% during the same time frame.


If the Generals are going
to hold these recent lows and put some money to work, then the NDX can certainly
run at least to retracement levels in the 2350-2450 zone, while the SPX can run
to the 1320-1340 zone. If the NDX stalls out at about the 2200 level, which is
the .38 retracement of the last leg down, then it could get ugly. The
first hurdle for the Generals is to reverse the 2087 low, which is up 5.6% from
here. The SPX reversed the 1254.07 low yesterday, trading up to an intraday high
of 1267.42, but couldn’t hold it and closed at 1253.80.


The Semis had another power
day led by
(
MU |
Quote |
Chart |
News |
PowerRating) which finished +12.5% and has now advanced 36% in just four
days from a 32.75 low to yesterday’s 44.60 intraday high. When
the pigs feed at the trough as they have since last Thursday, emotion gets ahead
of reality and the market makers and specialists gap out much of the move on the
openings. 


For example, the last two
days MU gapped open +9.5% from a 36.09 close to a 39.40 open — and then
yesterday opened at 42.45, +8.8% from Monday’s 39 close. Unless there is a deal
coming — and I doubt that –  it is extended enough that you should be
looking for an intraday airpocket short in MU and any of the other Semis that
have moved in a similar fashion.


The Energies from yesterday
all advanced above the previous day’s highs, but only APA had a multipoint move.
This sector continues to be an easy decision for portfolio managers and until
proven otherwise by price, we must continue to focus on this sector when we get
setups on the daily chart.

(March
Futures)

Fair Value

Buy

Sell

1.75

 3.05 

 .30 

Pattern
Setups


(
AMGN |
Quote |
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PowerRating),
(
LXK |
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News |
PowerRating),
(
ROK |
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Chart |
News |
PowerRating),
(
BA |
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Chart |
News |
PowerRating),
(
HAL |
Quote |
Chart |
News |
PowerRating),
(
CAM |
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Chart |
News |
PowerRating),
(
NE |
Quote |
Chart |
News |
PowerRating), and
(
DO |
Quote |
Chart |
News |
PowerRating). Also
(
AA |
Quote |
Chart |
News |
PowerRating) and
(
AL |
Quote |
Chart |
News |
PowerRating) (whichever one they come for, or both),
(
CAH |
Quote |
Chart |
News |
PowerRating),
(
IBM |
Quote |
Chart |
News |
PowerRating)
(on a recross of the 200-day EMA),
(
DVA |
Quote |
Chart |
News |
PowerRating) and
(
EMC |
Quote |
Chart |
News |
PowerRating). 

 Have a good trading
day.