Exaggerated Moves

August 29, 2000
Dave Baker

Looking at an intraday futures chart, I can see why so many traders go on
vacation this time of year. At the same time, I can also tell how many traders
are on vacation right now, many. Personally, I do not mind this type of
environment, because I am catching more exaggerated moves.

For the daytraders out there, over the very near-term, I’m watching the
brokers and financials for more new high breakouts.

Elantec
(
ELNT |
Quote |
Chart |
News |
PowerRating) is poised to close at a new high and
complete a high-level cup formation on Tuesday. Look for a close above the July
highs to lead to a potential continuation move on Wednesday. Should ELNT close
at a new high, set your alerts above Tuesday’s intraday high. Noteworthy on the
ELNT chart is the volume on Tuesday. A new closing high backed by strong volume
is a nice thing to see on any chart.

Intuit
(
INTU |
Quote |
Chart |
News |
PowerRating) surged higher last week and the began to pull back. The
current situation shows a bullish flag forming on descending volume, the way it
was meant to be. Look for the volume to bottom as it heads lower. If and when it
reverses, watch for a move above the prior day’s intraday high. Volume should,
ideally, increase during a rally out of a bullish flag. For more information on
such patterns, refer to the Baker/Ten Electronic Trading Course, Week Three.

For the more aggressive recent IPO traders, WJ Communications
(
WJCI |
Quote |
Chart |
News |
PowerRating)
looks interesting. After gapping higher like many IPOs, it pulled back on light
volume. As it rallies out of this pullback and sets a new high, the volume is
beginning to pick up again. Like any breakout, watch for a new closing high,
followed by a second move higher on Wednesday. When trading a recent IPO,
consider using a tighter-than-average stop and taking a smaller position size,
because there is not as much support backing any move.