Be Ready For The Contra Move

September 29, 2000
Kevin Haggerty

A thank
you to the
Generals is probably in order for
making the week yesterday. Just about all of their key blue chips and momentum
stocks were taken up with multipoint moves. The S&P 500, which had started the day,
-2.9% on the year, finished +2.2% on the day and their overweighted NDX 100
climbed +4.3%, which puts it up 0.4% for the year. Outstanding work, Generals!

There was big volume, of
course, at 1.2 billion. Institutional blocks jumped to 26,746. The volume ratio
was 75, with a whopping 880 million up and only 292 million down. Advancers
swamped decliners by +1,021. The subtle dynamics from Wednesday gave you an
inkling there might be a change in direction. Keep up your market dynamics sheet
every day. It often gives you a story.Â

All sectors were green
yesterday except the XOI and OSX. The semis were up 4.3%, matching the NDX 100.
The BTK, the biotech index, was +4.5%, the XBD +3.5%, and the BKX +2.7%. Two
beaten-down sectors, the dotcom and the XTC, which is the telecommunications
index, rallied 5.6% and 5.5% respectively.

The basics, led by the
papers, where I see the FTP was +3.5%, got a price pop, but it wasn’t on a
significant increase in volume. Those of you that attended my New York seminar
should observe that all the papers are setting up in RST buy patterns.Â

Today we have the Apple
(
AAPL |
Quote |
Chart |
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PowerRating)
show, as I see the stock traded down to 29 1/2, off a 53 1/2 New York close.
Just a nice 45% loss in the after-hours casino of zero liquidity. That certainly
takes the edge off a continuation move today by the Generals in their attempt to
get the S&P 500 to the plus column year to date. They are just 0.7% shy of
accomplishing that goal.Â

There are obviously many
top-of-the-range pattern setups after yesterday’s markup and those stocks are
still the ones to focus on today. You probably won’t get continuation entries,
at least in the early going, but they are the stocks that will be on your
intraday scrolling list. If we get the early-futures-down scenario, you just
switch channels to trap doors and fading the open and/or early decline of the
stocks, if they get out to the 1.5 or 2 standard deviation bands.Â

If they beat them up early,
they will pick them up later for a good contra rally–at least one. Right now,
the futures are off 5 points and many of the techs are getting moved down in
Instinet as the market makers get ready to accommodate the emotional retail
selling. So it goes.

face=”arial, helvetica”>(December Futures)
Fair Value	size=2>Buy	size=2>Sell
18.30	19.50	17.10

Pattern
Setups

Have a good trading day.

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Be Ready For The Contra Move

BUY THE FEAR, SELL THE GREED

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