Tech Pigs Return to Trough
This is
written Friday at about 8:20 a.m. ET, so the November employment
report hasn’t yet been released. Excellent trade through entry on the QQQs
Thursday for a 4-4.25-point move from entry level to high. This of course due to
the return of the tech pigs to the trough. This is better than watching a good
heavyweight fight as the overweighted tech-laden institutions keep throwing more
money at these major techs and spreading their wings into some of the
funny-money stocks that are skyrocketing on investor psychology and no earnings.
Perception is everything. In a running bull phase, which the techs are in, there
is no such thing as a balance sheet or income statement, at least until it hits
the fan. Go back and check the charts for 1995 and look at Micron Technology
[MU>MU], National Semi [NSM>NSM], and Advanced Micro [AMD>AMD], and
some of the other major techs that were hot during that timeframe. It will give
you some reality.Â
“Your
better trades will come from pullbacks in the strongest stocks that remain
above their open…”
It’s that time of month again, as we
have amateur hour starting at 8:30 a.m. ET with the employment report. As you
observed Thursday, we were early up on the S&Ps, then went sideways until
the last hour, then up into the close. That action prior to many of the past
reports has preceded upside reaction the next day. That research department in
the sky only talks to certain customers. The Fed regional mantlepieces were out
jawboning Thursday with a favorable tone.Â
The easier trade Friday is for the
overreaction to be to the downside and you will get some good trap-door buying
opportunities as you fade the selloff engineered by whoever it is that bangs the
S&P futures at report time. The bias is to the upside — that’s obviously
the better trade because the institutions will come back for it. If you fade the
sell overreaction, it’s tougher because we’re in a very strong price uptrend.
You must stop and reverse to the upside if the Generals pile in and we get a
pure uptrend day from start to finish. Your better trades will come from
pullbacks in the strongest stocks that remain above their open and then retrace
some of the early-morning exuberance.
Program
Trading NumbersBuySellFair
Value4.102.053.05
Pattern Setups
These are all flyers because that’s
the kind of tape you’re in. And if you don’t have the proper communications
setup, I wouldn’t fool with these unless you have limit orders and you can get
reports immediately. These stocks will all probably move like CNET
[CNET>CNET] and Xilinx [XLNX>XLNX] did Thursday. Ariba [ARBA>ARBA],
Siebel Systems [SEBL>SEBL], Comverse [CMVT>CMVT], Conexant Systems
[CNXT>CNXT], Redback [RBAK>RBAK], Echostar Communications [DISH>DISH],
Qualcomm [QCOM>QCOM], an old friend of ours; Network Solutions
[NSOL>NSOL], Voicestream Wireless [VSTR>VSTR], Verisign [VRSN>VRSN],
and of course, our good friend, AOL [AOL>AOL]. On these stocks, you will
almost always do best taking the second entry after the initial headfakes early
on. If you enter on your first try, it’s better to go half your normal
size.
And if any of you out there were smart
enough to bracket the bonds and put a sell order a couple of ticks below
Thursday night’s close and a buy order a couple of ticks up above, let me know,
as you will be well-rewarded.
Have a good trading day.