Watch The Bonds
Watch The Bonds Slim pickings yesterday, as the long bond traded to new lows after the opening, and the S&P 500 went south. There was short-side opportunity as the S&P 500 cash broke 1298 and knifed down to 1286. An afternoon rally from a cup-and-handle or a 1-2-3–it fits both criteria–took the index from 1290 to over 1300, before fading to close at 1293.65.
| A stronger trade often occurs when there is convergence between patterns on the five-minute chart and the daily chart |
Overall, yesterday was nondescript. Most major sectors, except the Internets, were red yesterday. At times, there were small rallies from the Morgan Stanley high-tech index, which really didn’t bust through. The bottom line is that the S&P 500 and some of the other major indexes ended up with an inside day. After big overreaction to the upside the prior day, many of the financials pulled back, and now we can look for some setups.
Around 8:30 AM ET, the futures are flat, CSCO is up over 1 point (we’ve got some people speculating there), and INTC is up a half-point. The techs did do well relative to the market yesterday, and it looks like we’ll get some carry-through in them this morning
Target Stocks Of The Day Setups today include AT&T [T>T], which made an outside day yesterday on strong volume, Amazon.com [AMZN>AMZN], America Online [AOL>AOL], EMC [EMC>EMC], an inside day just below its 50-day exponential moving average (EMA), Sun Microsystems [SUNW>SUNW], CNET [CNET>CNET] and Tandy [TAN>TAN].
| Program Trading Numbers | ||
| Buy | Sell | Fair Value |
| 9.50 | 6.10 | 7.80 |
The focus right now really is on the long bond yield. We certainly need a rally in the bonds to generate any kind of confidence in the stock market. If we don’t, we’ll continue to drift along the down trendline.
Editor’s note: Join Kevin and Larry Connors for our second live audio TradehardNews.com Forum– “Integrating the TradingMarkets.com Indicators With TradehardNews.com To Maximize Your Trading Performance.” Kevin and Larry will explain how they combine information from TradingMarkets.com and TradehardNews.com to take profits out of the market. It’s in the TradingMarkets.com Live Forum section this Thursday, October 28!
If you want to learn more about Kevin Haggerty’s trading strategies, click on the link below to go to his series of tutorial articles.