Better

January 11, 2001
Kevin Haggerty

ItÂ
was an excellent day for those traders that
focused on key retracement levels, as you got two geometric entries yesterday
with great moves. The first was after a gap-down opening in the Nasdaq 100
(
NDX |
Quote |
Chart |
News |
PowerRating)
to 2258, which then traded down to the intraday low of 2237.Â

This was the .618
retracement between the 1/8/01 low of 2151 and the 1/9/01 high at 2364, which
was the Tuesday carry-through high after the Monday 3:00 p.m. – 4:00 p.m. spike.
This rally carried +7.6% to 2406 before a 5.2% knife down to 2280, which was
just above the .786 level.Â

From 2280, the NDX rallied
+6.1% to a 2417 high, closing at 2413.71. Not including the gap-down opening, it
was a 19% travel range in one day for the NDX 100. Both entries were defined
pattern recognition converging with Fib retracement levels, both of which I will
cover in detail at my Naples
seminar.

In spite of the aggressive
NDX program action, there was a much better overall feel yesterday. The biotechs,
financials (especially the brokers) and the chosen ones were green all day. The
drugs came out green as the NDX and other techs gapped down on the opening. The
semis turned green as
(
TXN |
Quote |
Chart |
News |
PowerRating) was able to post a gain of 1 11/16 on the day.
The drillers, which look like a Bush play, were up 2.1% on the day.

The early negative volume
ratio turned positive, finishing at 65 with 817 million up and 440 down. Breadth
was positive, with +814 advancers over decliners. Total volume was excellent at
1.3 billion. Encouraging also is that 63% of NYSE stocks are now above their
200-day moving average.Â

The NDX finished +4.4%; the
S&P 500
(
SPX |
Quote |
Chart |
News |
PowerRating) +1%; while Dow basics were mixed to red as the techs and
related took center stage. Both the NDX and SPX closed in the top of their
ranges above their opens, and reversed two highs and three closes. They were
both outside days.Â

It doesn’t take much volume
to sink a market that has fear built in like we have now, but it takes
sufficient capital to overcome the sellers, both institutional and retail, that
are waiting to sell at levels on the way up, that they missed coming down. If we
do get more than a two- or three-day rally, they will continue to be sharp both
ways, so you must be flat at night unless you are hedged.

The Generals can go a long
way in restoring some confidence if they can take the NDX above the 2547 last
swingpoint high. We have already gotten an RST and Fib retracement entry, so
above 2547 completes a 1-2-3 bottom pattern with higher highs and higher lows,
which we haven’t seen since 9/1/00.

Also, make sure you read Carolyn
Boroden’s text from yesterday. It sums up some key Fib retracement levels
for the Nasdaq futures and is a practical lesson on Fibonacci. I suggest you do
the work and follow how she reached those numbers.

face=”arial, helvetica”>(March Futures)
Fair Value	size=2>Buy	size=2>Sell
12.15	13.65	10.85

Stocks Today

I love the semis — they’ve been
trying to base for a long time as I’ve mentioned prior to this.Â

Have a great trading day.

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