The Pre-Holiday Plan

• May 27, 2004
• Kevin Haggerty

Listen to Kevin talk about
trading, and his upcoming seminar,

here.

What Wednesday’s Action Tells
You

The previous up trend day, plus 1.6% and 1.55
billion shares, was followed by the narrow-range opposite day, as the SPX
(
$SPX.X |
Quote |
Chart |
News |
PowerRating) closed at 1114.95, +0.2%. It has now finished on the plus
side
for five straight days. NYSE volume dropped to 1.37 billion shares with the
volume ratio 60 and breadth +896. The 4 MA of the volume ratio is now 71 and
breadth +1425. That, in addition to the 5 RSI of 78, puts the market into
the
extended short-term overbought condition again, but it doesn’t have as much
of
an effect as does the short-term oversold condition on a retracement in a
rising
longer-term trend. However, for the intraday and short-term trades, it is a
zone
of opportunity for short setups in the major indices, as price is trading
into
the initial resistance. 

Â	Thursday 5/20	Friday 5/21	Monday 5/24	Tuesday 5/25	Wednesday 5/26
IndexÂ
SPX Â
HighÂ	1092.62	1099.70	1101.71	1113.80	1116.71
LowÂ	1085.43	1089.19	1091.77	1090.74	1109.91
CloseÂ	1089.18	1093.59	1095.34	1113.08	1114.95
%Â	+.05	+0.4	+0.2	+1.6	+0.2
RangeÂ	7.2	10.5	9.9	23.1	6.8
% RangeÂ	52	42	36	97	74
INDUÂ	9938	9967	9958	10118	10110
%Â	0	+0.3	-.08	+1.6	-.08
Nasdaq Â	1897	1912	1923	1965	1976
%Â	-.08	+0.8	+0.6	+2.2	+0.6
QQQÂ	34.85	35.02	35.26	35.96	36.19
%Â	+0.5	+0.5	+0.7	+2.0	+0.6
NYSEÂ
T. VOLÂ	1.21	1.26	1.23	1.55	1.37
U. VOLÂ	529	840	823	1.34	804
D. VOLÂ	669	402	376	163	544
VRÂ	44	68	69	89	60
4 MAÂ	47	60	58	67	71
5 RSIÂ	37	49	53	78	79
ADVÂ	1938	2187	2395	2800	2099
DECÂ	1388	1086	920	570	1203
A-DÂ	+550	+1101	+1475	+2230	+896
4 MAÂ	+264	+850	+848	+1339	+1425
SECTORSÂ
SMHÂ	-0.5	+0.4	+0.6	+2.7	+0.5
BKXÂ	+0.5	+0.8	+0.3	+1.5	+0.6
XBDÂ	-0.1	-0.1	+0.6	+1.6	+0.5
RTHÂ	-.06	+0.5	+0.5	+2.1	+0.3
CYCÂ	-0.6	+0.7	+0.9	+2.0	0
PPHÂ	-0.3	-0.2	-1.0	+0.9	+0.6
OIHÂ	-0.5	-0.7	+4.2	+1.4	-1.7
BBHÂ	-0.4	+0.5	-0.3	+1.6	+1.4
TLTÂ	+0.8	-0.4	+0.3	+0.3	+0.5
XAUÂ	-0.6	+2.2	+1.4	+1.6	+1.0

^next^

Today’s
Action

The daily range in the SPX yesterday was just
6.8
points with no real reaction either way to any news. When there is no travel
range, it is very tough for a trader to ring the register. Pre-holiday
malaise
has set in. Looking at the
(
SPY |
Quote |
Chart |
News |
PowerRating),
(
DIA |
Quote |
Chart |
News |
PowerRating) and
(
QQQ |
Quote |
Chart |
News |
PowerRating), you see a
sideways range for most of the day, as they all traded less than their
average
volume. The SPY, 36 million — 51, QQQ 94 million — 122, and DIA 6.4
million —
8.0.

This corner’s pre-holiday routine is to
anticipate the levels and observe the price action when it gets there to
look
for any setups, but will not press any trades that are marginal. You can
trade
the overreactions to any news, but not the direction of the market of the
announced news.

The futures are early green, with the Dow
+24,
S&Ps +2.30 and Nasdaq +4 at 7:40 a.m. ET, so if the opening move is up,
the
QQQs, which closed at 36.19, has the initial zone at 36.25 – 36.60. Intraday
RST
players see that 36.19 would be the 4 point if taken out. For the SPY,
112.29
must get taken out for the RST to form, and the resistance is from 112.25 –
113.25. The DIA closed at 101.35 in a Slim Jim between 101.40 – 101. Initial
resistance is at 102.30 – 102.60 with the 200-day EMA below at 100.22.

Into this holiday weekend, the major index
proxies/futures/HOLDRs are the preferred vehicle.

With the XAU up +1.0% yesterday and +15.3% in
13
days, two gold stock positions were sold out yesterday, keeping just 50% of
a
third with a tight stop.

Have a good trading day,

Kevin Haggerty