10 Stocks To Look At Today If We Head North

December 17, 2002
Kevin Haggerty

The
major indices started this cycle week with a trend day,
which was Up, Sideways, Up. The
(
SPY |
Quote |
Chart |
News |
PowerRating)s jumped out of a three-bar dynamite triangle after the opening to new
intraday highs above 89.96 and never looked back, trading up to an intraday high
of 91.79, closing at 91.61. There were several tight five- to six-bar
consolidations on the way up before a loose Slim Jim formed from 12:00 p.m. ET
until the breakout on the 3:15 p.m. bar up to the intraday high. The SPX has
once again provided a good trading opportunity from the 890 level. The SPX
(
$SPX.X |
Quote |
Chart |
News |
PowerRating) and Dow
(
$INDU |
Quote |
Chart |
News |
PowerRating) both finished +2.3%.Â NYSE volume was
below average at 1.24 billion, but the volume ratio at 84 and breadth +1329 were
very positive.

The option activity I

mentioned on Friday that signaled the Program Gang gearing up was evident
yesterday with more than the usual buy programs. This activity helped accelerate
the SPX and Dow to wide-range-bar up days that reversed and closed above the
previous four highs and five closes. That is a nice one-day move from that
coiled volatility mentioned Friday. More importantly, it was right from an
awareness zone entering a cycle week after a nine-day decline.

The
(
SMH |
Quote |
Chart |
News |
PowerRating)s gained
+4.1% and gave us an easy 1,2,3 close pattern from the .50 retracement to the
17.32 October low, which is 24.16. Yesterday’s intraday low was 24.12, entry was
above 24.37. Those of you who have attended one of my seminars probably all
caught that. The 1,2,3 close will be part of the advanced 1,2,3 module. The
trade was good, but the SMH volume was the lightest up volume day since Nov. 15,
which isn’t what we want to see. In the other major sectors, the brokers and
banks gained +3.4% and +3.0%, respectively. The oil service stocks gained +4.9%
amidst the current unrest. The biotechs, which is the
(
$BTK.X |
Quote |
Chart |
News |
PowerRating), ended at
+3.5%. If you are trading the brokers, remember it’s an earnings week with Bear
Stearns on Dec. 18 and Goldman Sachs, Morgan Stanley and Merrill Lynch on Dec.
19.

Starting out this
morning, the first zone we should look at is that 907 – 904 Slim Jim range from
yesterday afternoon for the SPX. Any running of stops will shake the tree below
the bottom of that range. It will probably not allow those who bought or carried
positions overnight in the major indices to rest on their laurels and will test
their character this morning. If the SPX breaks below that range, I look to the
retracement levels between 910.12 and yesterday’s low of 889.40 for the first
potential long setup on the SPX, which will probably relate to the other
indices. The .38 level is 902.25, the .50 is 899.76 and the .618 is 897.30. Do
the same thing with the other indices. You should always frame the previous
day’s most significant high and low and also whatever the last leg was.

This week should provide
most of the activity as next Tuesday is a half day on Christmas Eve with
Wednesday the holiday, and that leaves Thursday and Friday as likely mark-up
days, market permitting. The bias is also certainly up next Monday and on the
half day Tuesday before Christmas.

If for some reason they
open up, I would refrain from any first entries and wait for potential pullback
setups today.

Have a good trading day.

Five-minute chart of
Monday’s SPX with 8-, 20-,
60- and 260-period
EMAs

Five-minute chart of
Monday’s NYSE TICKS

10 Stocks To Look At Today If We Head North

BUY THE FEAR, SELL THE GREED

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