Traders Gain With Stock Selection Process

provide much opportunity for daytraders until a small 2:25 p.m. ET advance into

the close, which was not much more than a scalp. The SPX
(
$SPX.X |
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on an inside day at 1204.29, +0.2%, the Dow
(
$INDU |
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while technology was the day’s leader with the
(
QQQQ |
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was led by semiconductors, as the
(
SMH |
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ratio 57 with breadth +636. Of the nine sector SPDRs, only three closed green,

which were the XLY, +0.5%, XLK, +0.4%, and XLP, +0.3%. The industrials (XLI),

healthcare (XLV), utilities (XLU), energy (XLE), financials (XLF) and basic

materials (XLB) all closed small red. There was a big drop off in
(
SPY |
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PowerRating)

volume to 40.5mm shares from 70mm on Wednesday. The same was true for the

major indices yesterday, daytraders can always find some excellent setups from

my Stock Selection Method using the “Above the Line” and “Below the Line” lists.

Yesterday,
(
UNH |
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PowerRating) provided a no-brainer with a good daily chart Slim Jim

setup on Wednesday just below its all-time high of 49.87 on 04/20/05. The Slim

Jim breakout level was 49.55 (Wednesday’s high). Entry above 49.55 was on the

9:40 a.m. bar (five-minute chart), and the stock traded to 50.60 before fading

to close at 50.38.
(
COH |
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PowerRating) followed up Wednesday’s breakout trade above 29.47

to 30.93 (30.67 close) with another excellent continuation day yesterday with

entry above 31.93, trading up to 32.63 before closing at 32.07, +4.6%. Both

stocks had excellent daily chart contracted volatility patterns, and if you use

my “Above the Line” method, you had them on your trading list each day.

Remember, the best daily chart patterns will most often produce the best

QQQQ (trading days) measured from the 06/30/04 37.90 top to the 40.68 12/15/04

top. There is also pattern symmetry on both sides of the 40.68 high, starting

with that 37.90 top to today, June 3. Monday, June 6, is the 1.27 Fib ratio for

the DIA and SPY, measured from the 10/25/04 and 04/20/05 bottoms. The risk of a

short-term reversal rather than acceleration through this current zone is more

likely because of the extended three-month standard deviation levels. I expect

the Generals to make a strong attempt, barring any overt news, at marking up

their major holdings into the June six-month report card, so any short-term