Be Careful With Entry

June 18, 2002
Kevin Haggerty

Overall volume declined,
but that is not unusual after a panic day, as sellers back off and the Generals
are reluctant to chase price if they can’t get enough volume. The shorts hoped
for a pullback, but it didn’t come yesterday, so they are forced to push prices
higher.

NYSE volume was about 5%
below average at 1.23 billion, volume ratio a one-sided 89, and breadth big at
+1553. The ratio of up to down volume yesterday was better than 7:1 all day. The
Nasdaq volume also fell off to 1.576 billion, which is about 90% of its average,
a volume ratio of 77, and breadth +1207. It was a gap open and never look back
for the major indices yesterday.

The SPX ran to the .618
zone at 1033 by noon, hitting a 1032 high, then traded in a 3 point Slim Jim
before breaking out on the 2:35 p.m. bar, but not for much, closing at 1036.17.
If you got in at the lowest common denominator level on Friday on the indices or
(
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PowerRating)s and went home long because you had a large gain, then you just keep
moving your stops up until taken out. If you feel as I do that you want to start
taking your market position on a scale-down basis, for example, from 995 down on
the SPX, or other related indices, then you keep making your intraday trades
while maintaining the first part of your long entry taken on Friday.

I am one that feels
2003-2004 will be very positive, and I want to be in before the end of 2002. Any
qualification due to another 9/11 is obvious, but that is not going away, so you
can either hide in a cash account or make a market decision at some juncture for
your longer-term money. Yes, you’re right. It is a perfect situation for options
strategies. I suggest you read the book by Harrison Roth titled
"LEAPS".

The answer to what
scenario I would prefer is that I would like to get some more downside below
982, and maybe a move below 900 to get about 65% to 70% long there before being
forced to buy strength on the way up, which is a nice problem to have. I have
been asked that question many times, so that’s my answer. I don’t know about
you, but it never goes exactly how you want it to, but you still must have a
plan, whether it be aggressive or conservative. If you don’t have the plan, then
you will be caught saying, "Is it or isn’t it?" all the time and make
no decision.

Stocks
Today

We had some excellent
moves with good entry in some of yesterday’s stocks. We are in the same
continuation mode today, except that you must be careful with your entry
strategy after the two wide-range bar days up. The early red in the futures will
dictate today’s strategy.

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

Be Careful With Entry

BUY THE FEAR, SELL THE GREED

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