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.
Day Trading
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.
Playing The Support Levels
Dell Computer’s sell-off early yesterday pulled
the plug on the rest of the market.
But true to form, Dell managed to rally back to 84 before drifting between 82 and 80. Volume was
big at 56 million (that’s real volume, not double-counted). The drop put Dell down 32 percent in
11 days from the 110 double top, and it of course has company in many of its tech relatives.
Counter-Opening Opportunities
Yesterday the
S&P 500 futures were up early and the tail wagged the dog–at
least initially. Stocks gapped on the opening and the Dow shot up over 100 points
in the first hour. After that, though the market sold off until staging a minor rally from
2:00 – 3:00 p.m.
Tough Road Ahead
After the aggressive end-of-1998 markup and the
“welcome 1999” rally, with high closes of 9643 in the Dow and 1280 in the S&P 500 on January 8,
the market has been stuck in a 5 to 5.5 percent trading range for the past six weeks. Make sure
you have a strategy in place to play the move out of this range.
Volatile Markets Demand Discipline
More of the ugly same. Yesterday, volume wasn’t huge compared to the
percentage down
moves in the Nifty 25-50 stocks that have carried the market to its lofty speculative heights.
It was the seventh straight day of negative breadth, and most of the key players were on the sell
side.
Weak Market Infrastructure
Yesterday, volume and institutional block activity
dropped
off noticeably. The techs tried to make up some of last week’s 12-15 percent loss, with Dell,
Microsoft, and Intel–the best of the bunch–all gaining approximately 3.5 percent.
Back To Basics
Yesterday, the futures turned down right before the opening and the tech
stocks went south. Interest rates perked up, the long bond lost almost a point, and the Utility
Index (UTY) closed below its 200-day moving average for the fifth straight day.
Mission Accomplished
January turned out to be a good month for the mutual
funds, with many of them concentrated in the big tech issues that have outperformed the S&P 500
(which is up 4.1 percent year-to-date, and coincidentally, up 4.1 percent last week).
Kevin Haggerty: Exploiting Institutional Action In The StockMarket
When the evening news tells you why the big rally or drop occurred in the
stock market today, that’s one thing. When trader Kevin Haggerty tells you, that’s another thing altogether.