All Aboard

  • June 30, 1999
  • Kevin Haggerty

Window dressing, “I’ve had enough of the Greenspan rhetoric”–whatever the reason–yesterday was an excellent trending day from start to finish. Volume was good, breadth was excellent, and the 566 million up volume was the most in two months. All sectors were essentially green all day and the major averages closed near their highs for the second day in a row, all up around 1.5% each. Bonds also finished near their high for the second day in a row.

In addition to the institutional buying, the S&P cash had a very interesting finish: It happened to close at 1351.50, just a fraction above the June 22 swing point high of 1351.09–and it managed to accomplish this in the last five minutes of trading. Most “coincidences” always seem to happen at key times.

I would expect the market wants to move up, unless we get some strange, off-the-wall choke shot by the much-too-visible Fed. But based on how this tape has traded the last two days, I don’t think there will be a major surprise coming out of the FOMC meeting. But if there is, there will be a tremendous overreaction to the downside, which will create an excellent buying opportunity.

Target Stocks Of The Day  We’ll go with the high-momentum stocks again–they got marked up pretty good yesterday and some of them set up again today. These are the kinds of days when, if it looks like they’re going to go, you just get on board when you see what direction the train is going. Watch American Express [AXP>AXP], Texas Instruments [TXN>TXN], Microsoft [MSFT>MSFT], Sun Microsystems [SUNW>SUNW], Intuit [INTU>INTU], Tellabs [TLAB>TLAB], Qualcomm [QCOM>QCOM], Maxim [MXIM>MXIM], Adobe [ADBE>ADBE], Legato Systems [LGTO>LGTO] and America Online [AOL>AOL].

Program Trading Numbers
BuySellFair Value
13.409.6511.65
Regarding the program numbers: I’ve received many inquiries about how to utilize this information. The first thing I can tell you is to forget about fair value–it doesn’t mean a thing. Second, look at the buy and sell program numbers, watch the tape during the day, and see how the market behaves: watch how the ticks go up and down at certain levels, watch the difference in the up volume vs. down volume–if a sell program kicks in, for example, you might see the down volume increase by 10 million with no change in the up volume.

You just have to watch the interaction of these elements to get a feel for things–there are no set numbers you plug in and trade off of. There are a wide range of program trading levels different firms use based on their cost of money (everyone’s is different). The program numbers are simply tools to alert you to the fact that, for example, you might be able to buy stocks on a pullback if the selling is primarily programs, and you might be able to go short on a down tape when buy programs come in. That’s how you should view these numbers; they don’t represent a mechanical trading system.

Editor’s note: If you want to learn more about Kevin Haggerty’s trading strategies, click on the link below to go to his new series of tutorial articles.