Generals Have Troops Marching Into Year-End
  As expected, the Fed bumped up interest rates .25 points.
And you can forget that bias double-talk. The Fed can jump in at any time if they see funny inflation numbers, or even raise margin requirements, which would probably be a disaster.
The bottom line is that the Generals will make this a good year. After the daily inflation chatter on TV for the past several months (which certainly wore me out), the S&P 500 is trading at a new all-time high. Probably not what Mr. G wants to see the same day he does his thing, but nevertheless, it’s there.
The S&P 500 is up 15.5% on the year–15.1% in the last 22 days The future boys blew the S&Ps down 20 points from 1423 to 1403 on just two five-minute bars on the expected Fed announcement. I assume the futures raiders got what they wanted, but the market than rallied right back to 1417, consolidated into a symmetrical triangle, and, just before 3:30 PM ET, ran up about 28 points. You gotta love it.
With yesterday’s 1.8% advance in the S&P 500, the Generals now have the index up 15.5% on the year–with 15.1% of that occurring in the last 22 days. Nice job, Generals. It’s probably on its way to over 20% on the year unless Greenspan does something stupid, like raise margin requirements–highly unlikely, because he knows it will take down the entire house of cards.
I don’t know how long the game can go on of a company having reduced earnings and talking them down to the Street, then having them come in better than expected (right)–not down as much as they thought, and then having the stock run like crazy. So what if 100 times earnings? We’re in a new paradigm, aren’t we?
What’s your address so I can send you some ice in February. Translated: Keep your finger on the eject button at all times. Take windfall profits when you get them. The futures game is giving you multiple opportunities to enter on any time frame. But after the violent run-ups, the last man holding the bag gets air, as many of the stocks collapse 10 to 20% in a day or two before the game starts all over again.
My goal in making these points is to get you to focus on trading “what is”–not what you think should be, and certainly not what they say on TV.
Pattern Setups  If they decide to come for them again: Texas Instruments [TXN>TXN]; Legato [LGTO>LGTO], which gave good entry and a 3-point move yesterday on a wide-range bar; Tellabs [TLAB>TLAB], another wide-range bar to new highs. In the Internets CMGI [CMGI>CMGI]; Redback [RBAK>RBAK]; Broadcom [BRCM>BRCM], and Scientific Atlanta [SFA>SFA].
Figure 1.  Legato (LGTO), daily.  Source: Quote.com.
Cisco [CSCO>CSCO] closed at new highs yesterday; this is certainly one of the top ten stocks of almost every institution. Johnson & Johnson [JNJ>JNJ] closed at a new all-time high yesterday. It’s got nothing but clear sky above.
Program Trading NumbersBuySellFair Value6.253.855.05 The futures are off a little in early trading. Watch out for air pockets underneath if they decide to take profits.
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.