Be Ready For Program Action

June 29, 2000
Kevin Haggerty

Yesterday, we had a
spike-up early from 1471 to
1486 on the S&Ps until the after 3 p.m. programs gave us a spike-down on
wide-range bars right back to 1471. Futures-related programs control the
short-term movements. If the SEC doesn’t step in, it won’t change. From a
trader’s standpoint, let’s hope they let the free-wheeling action continue. They
know the games that are played but maybe they look the other way because the
S&P futures is the tool that can stop a meltdown, with some of the anointed
ones coming in to buy S&Ps at key times during fear-induced meltdowns.Â

Most all the Asian markets are rigged
by the governments but that is well known. On the other hand, our market is
subtlely controlled by the infamous “they,” whoever they might
be. It is interesting to me how many U.S. Nostradamus market gurus keep waiting
for confirmation of I don’t know what, as most key stocks have already moved
40%-50% from classical entry levels, which was declining stock to a rising
200-day EMA, which is one of the best entries you can get. The risks are much
lower and rewards much greater if you get those kind of entries.Â

Example: Sun Micro
(
SUNW |
Quote |
Chart |
News |
PowerRating) pulled
back to a rising 200-day moving average and hit a low that day of 67 1/8 but
closed in the top of its range on a wide-range bar above its rising 200-day EMA
of 72.62 at the time, and hasn’t looked back. The stock has risen from a low of
67 1/8 toÂ 98 1/4 on June 21, which was last Wednesday, which is a +46%
move. When will confirmation come? When it breaks out to new all-time highs
above 106 3/4? Which entry would you prefer? Of course!Â

SUNW closed at 90 3/16 yesterday, but
by taking the entry at the lowest common denominator, which was a recrossing of
the 50-day EMA of 87.48, you got a run to a high ofÂ 91 3/4 with 4 1/4
points to play in. The continuation entry was above 91, which was Tuesday’s
high, but the stock had closed at 87 7/16, so why give up all that range before
you enter?Â

Pullbacks to rising 200-day EMAs in
favorite institutional stocks is one of the strongest entries for short-term,
intermediate-term or any kind of term you can get. Yes, at those times, the
financial drones are espousing fear stories and at confirmed new highs, it’s the
“never-be-another-down-day” story. You just witnessed a bubble market
where many market psychology stocks made new highs daily, so it is an adjustment
for some of the Johnnies Come Lately to adjust to the real world. You should be
ready for more volatile program action today and tomorrow as institutions jockey
their portfolios. The bias is still up, however, through the first week of July
until the action proves otherwise.Â

Program
Trading Numbers

(September Futures)

Fair
Value

Buy

Sell

19.30

20.50

18.10

Pattern SetupsÂ Â

Be Ready For Program Action

BUY THE FEAR, SELL THE GREED

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