The Dow closed at an all-time high of 9736.08 on Friday, up
268.68 on the day. Six stocks–IBM, AXP, MCD, WMT, UTX, and T–accounted for 46 percent of the
move.
Players Make Upside Push
Yesterday was almost a replay of Wednesday’s action, when the Mysterious
Futures Man showed up at 3:30 p.m. to close the S&P 500 cash right at its 50-day moving average.
Oversold Condition
After some early enthusiasm yesterday, with the S&P futures dictating the
NYSE opening once again, the SPDRs traded below their 50-day moving average, made one attempt to
rally above the early morning high of 123.56, failed, and sold off to a low of 121.81.
Tried, But Failed
The S&P 500 tried to reach daylight with its run from
11:00 a.m. to 12:45 p.m. yesterday, but it turned on a dime to close below its 50-day
moving average (1227.82) at 1225.50.
Upside push?
With the Dow, NASDAQ, Russell 2000, S&P Midcap, and Dow
Transports all
finishing up yesterday, and with decent action in the financials, it looks like the market is
trying to make a move to the upside.
Tough Lessons
Friday’s debacle in stocks like Micron Technology (MU) and
Compaq (CPQ)
certainly demonstrate why you shouldn’t carry tech stocks overnight unless you hold puts or
have some other option strategy in place.
End Of The Month Check-Up
It’s the last trading day of the month. As of yesterday’s close, the S&P
cash was up 1.3 percent on the year. A program rally kicked in from 1:00-4:00 p.m. eastern time
yesterday, but the move didn’t appear to have much institutional support.
Deploying The Troops
Back to the high end of our 1999 trading range. The
institutions stuck to their usual game plan and came for the techs, drugs, and specialty
retailers again–it’s the only
way they can hope to keep up with the S&P 500. At least it makes stock selection easy, as
evidenced by the multi-point moves in many of yesterday’s names.
Good News, Bad News
We established a new market axiom yesterday to go
with two “tried-and-trues:” First, if you buy tech stocks, buy puts. Second, you don’t buy
airlines, you rent them. Third (our new one), when Greenspan speaks, buy straddles.
A Classic Day
Yesterday was the classic trend day of 1999:
Never more than a six-bar pullback (on a five-minute chart) before moving to new intraday highs
in the S&P 500 cash index.