Another Dynamite Day!

August 16, 2000
Kevin Haggerty

Most
of the stocks from yesterday’s
commentary made excellent moves by 10:30 a.m., before the futures
started to sell off. The trading day was essentially made in less than an hour.
Both shorts were good, as Brocade
(
BRCD |
Quote |
Chart |
News |
PowerRating) on your five-minute charts traded
through all three EMAs, the 20-, 60- and 260-, at the 206 level, and then down
to 202 before mounting a rally. Sapient
(
SAPE |
Quote |
Chart |
News |
PowerRating) broke below all three of its
EMAs at the 130 level and hit an intraday low of 127 before it rallied.Â

Yesterday, I told you to
take either a long or a short on ARBA out of the dynamite triangle which broke
out to the upside to an intraday high of 144 3/4. The entry point from the daily
charts was above 141 3/4 – 142, but if you look at your five-minute chart for
ARBA over the past two days, you will see how you could have entered before that
level. On Monday, ARBA closed on a 16-bar Slim Jim between 139 and 140, which is
very tight for this stock. The Slim Jim was right on the 20-, 60- and 260-EMAs.

The breakout of the Slim
Jim above 140 and all three EMAs was a good entry point. A second entry could
then have been taken above 142 out of the dynamite triangle on your daily chart.
The tape was green in the momentum stocks, the futures were rallying, so why not
take the five-minute-chart-pattern entry breaking above 140 and out of the Slim
Jim? The sell-short entry would
have been below 139, because that would have taken it below all three EMAs and
then you could have taken the second short out of the triangle.

FYI, these air-pocket
shorts should not be taken unless you have direct-access execution, because they
can reverse on you very quickly. You need to keep your finger on the ejection
button and have access to fast execution reports.

It may have been another
slow day for some, but for daytraders it was another dynamite day. The S&P
500 is churning in this 1490 resistance zone that also has a .786 retracement
level at 1495. The Nasdaq 100
(
NDX |
Quote |
Chart |
News |
PowerRating) closed at 3723, +3 points, and bumped up
against its 3750-3775 resistance level, hitting an intraday high of 3762. The
only green sectors yesterday were the MSH and SOX, +3.2%, which was bolstered by
another analyst, this one from Morgan Stanley Dean Witter. The retail index, the
RLX, was the negative leader at -3.5%.

Volume topped out at 896
million; breadth was negative; volume ratio at 42 and the S&P 500 finished
with a narrow-range-reversal day of 10.34 points, the tightest spread of this
rally from 1413.90 on July 28.

face=”arial, helvetica”>(September Futures)
Fair Value	size=2>Buy	size=2>Sell
7.10	8.35	6.05

Pattern
Setups

Also on the shorts, if we head south
and they don’t carry through: The first short on the QQQ
(
QQQ |
Quote |
Chart |
News |
PowerRating) comes below
its 20- and 60-period EMAs on your five-minute charts and that’s below 92 7/8.

Â Have a good trading day.

Another Dynamite Day!

BUY THE FEAR, SELL THE GREED

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