Tech Momentum Brings Greed Charging Ahead
After 28 points
down on the S&P 500 cash on Monday and Tuesday, the index
rallied to close Wednesday’s session up 8.81 points, thanks to the rally in the final
half-hour. The Turk must have shown up because he was mad at Airport Freddy’s
performance Tuesday. It was a choppy session, as evidenced by the up, down, up,
down, up pattern. The futures gang and program traders were very active. The
last two trading days of the month and the first five days of the next month are
far and away the strongest time for price advancement.Â
“There
are many pattern setups Thursday.”
Momentum in the techs has brought greed
charging ahead, and with it, more money into the related funds. The funds will
put it to work by buying the stocks, if they can, or the futures, to maintain
market exposure. Then they’ll buy the stocks at another time when they can get a
better mix of volume and price.
You could see that all over the tape
Wednesday. You certainly could see the choppy patterns on the S&P 500 cash
Wednesday, as it gave us an early-morning uptrend of 12 points from 1388 to
1400, where it bounced off that 1400 number three times. It was an 18-bar Slim
Jim pattern between 1400 and 1396. It couldn’t have been any clearer — it was
staring you right in the face. Traders were waiting to buy it if it made it
through 1400 on the fourth try, which usually leads to a powerful move. The
third time through is good, but the fourth time through is outstanding. Instead,
it came out of the Slim Jim to the downside and traded down to 1390. It then
rallied 8 points to 1398, sold off 10 points to 1389, and then the futures gang
took it back up about 9 points in the last half-hour to close just under 1398.
That’s about 50 points of travel range for the S&P 500 cash, and yet the
finish shows up just 8.81 points.Â
This is not about fundamentals, folks.
The game is played between the wires, from 9:30 a.m. ET and 4:00 p.m. ET. The
early-morning trend was up, the lunchtime countertrend was down, and the
late-afternoon trend was up — classic futures movement.Â
Save your 5-minute S&P 500 charts
every day and follow the patterns. You will improve your stock market timing.
You don’t want to be long a stock because it’s breaking out of a pattern when
you have the S&Ps in a countertrend move to the downside during lunchtime.
You’ll get dead space. Go hand-in-hand with your market dynamics. Put the two
together — that’s where you get the highest probability situations.
The momentum stocks had good reflex
rallies Wednesday, so we will stay with them Thursday.
Program
Trading NumbersBuySellFair
Value4.702.603.60
Pattern Setups
There are many, as we went from the
bottom of the range on Tuesday to the top-of-the-range closings Wednesday. The
standard market instruments, the OEX, QQQs, Spiders, and Diamonds all closed in
the top of their range, so they’re all continuation entries. CNET
[CNET>CNET], Citrix Systems [CTXS>CTXS], AOL [AOL>AOL], Lycos
[LCOS>LCOS], Texas Instruments [TXN>TXN], Hewlett-Packard [HWP>HWP],
Applied Micro Circuits [AMCC>AMCC], Xilinx [XLNX>XLNX], Home Depot
[HD>HD], which popped and closed above its last five days’ highs; Wal-Mart
[WMT>WMT], which is in the same situation; and Best Buy
[BBY>BBY].
Have a good trading
day.