Fade May Offer Early Opportunities
Fade May Offer Early Opportunities The last-hour fade yesterday took the life out of a decent rally. The up-volume/down-volume ratio was running better than 2-to-1 and even 3-to-1 up to around 1:00 PM ET. Yesterday was the first positive day of the last 11 days that advances led declines, even if only by 510 (until noon the edge was over 1000). The major sectors, other than the banks (which faded with the bonds), had been positive all day
Last Friday we had the bonds down, stocks up scenario, and yesterday was the opposite. Abby Cohen tried her best, calling stocks under-valued, but that couldn’t maintain the momentum. There were some nice moves in some of the techs, especially semiconductors and related stocks, but they, too, faded from their highs.
| With yesterday’s closing action and today’s early S&P futures (-2.90 around 8:30 AM), it looks like the early focus should be on Trap Doors and possibly Opening Reversals |
and possibly opening reversals if they don’t take them down too much on the opening. Yesterday’s high in the S&P cash of 1295.05 hit the wall right at the 200-day exponential moving average (EMA) of 1295.21. Short-side continuation entries in the SPDRs (SPY) and Diamonds (DIA) on penetrations of yesterday’s low can be taken, but with very tight stops, as they may quickly reverse from this oversold condition.
Target Stocks Of The Day Some stocks that set up from yesterday: 4 Kids Entertainment [KIDE>KIDE], Amgen [AMGN>AMGN], Network Solutions [NSOL>NSOL], which was up big yesterday and could offer trade opportunities on any pullback to the 71 – 71 1/2 level or on a continuation entry if they want to come for it again, Clarify Inc, [CLFY>CLFY], Applied Materials [AMAT>AMAT], Computer Associates [CA>CA], and Sun Microsystems [SUNW>SUNW], if they come for it if it makes new highs on a continuation entry.
Also, watch Texas Instruments [TXN>TXN] and Intel [INTC>INTC] on any pattern setups on your five-minute charts. The Internets have some open space, especially America Online [AOL>AOL] and CMGI [CMGI>CMGI], and also Yahoo [YHOO>YHOO] and Lycos [LCOS>LCOS]. Traders will be all over these four stocks when they see that open space. Again, watch for setups on your five-minute charts.
| Program Trading Numbers | ||
| Buy | Sell | Fair Value |
| 15.10 | 11.10 | 13.20 |
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