Bottom Of The Box

June 22, 2001
Kevin Haggerty

The Nasdaq 100
(
NDX |
Quote |
Chart |
News |
PowerRating)Â put the rush on yesterday
as it rallied to 1768.60, backed off to 1754, then made a 1,2,3 higher high,
running to 1774, giving short entry when it reversed 1768.60. The index sold
down to 1740 after entry and closed at 1751.22.Â

I will post a chart on
Monday as the purpose of this commentary is education and this is a good example
for your records. I will also include the SPX chart as it made a 1,2,3 lower
high, diverging negatively from the NDX. It was late in the day and the NDX only
gave you about a 65 cent run in the
(
QQQ |
Quote |
Chart |
News |
PowerRating)s, and the S&P 500
(
SPX |
Quote |
Chart |
News |
PowerRating)
only a few points, which was nothing if you used SPYs.

Using 1226 yesterday as a
pivot was a lay up, and a good example of “Sequence Trading” which I will expand on
in Las Vegas.
We had many trade-through entries from yesterday’s
list but the financials were the best of the litter for the second day of
strong gains. Why no brokerage stocks this week? Answer is: Backed off because
they were all reporting earnings this week. In hindsight, a missed opportunity
because of the continuation entries after
(
LEH |
Quote |
Chart |
News |
PowerRating)‘s 3.5 point gap opening on
Monday. You will get another chance after the pullback-from-the-announcement
thrust, provided the Generals really want to buy them rather than trade them.

The SPX ran to 1240
yesterday, backed off, and closed at 1237.04. Looking at the five-minute chart,
I’m thinking “heads up below 1234, then does anybody show up on the buy
side between 1231 and 1226?” If it trades below 1226, then reverses to the
upside, plan to take the long entry unless it is an obvious program and the
market dynamics are ugly.Â

What other key levels
should be on your alert list today? I will be looking at 1217 to 1221, which are
the Fib retracements to Tuesday’s 1207.73 low. Positive action would be to
reverse the 1226 number to the upside from a reversal pattern in that
retracement zone. The point of the exercise is to anticipate it and to plan
it.Â

Stock touts are a dime a
dozen — and not even worth that dime — so learn the basic essentials which
will hold you steady through all kinds of markets. Back off from your
oscillators, indicators and commentators while you concentrate on recognizing
the buying/selling pressure and Change in Direction or continuation patterns
that continue to repeat in all kinds of markets. The rest of it just confirms
what you see.

Yesterday was a huge NYSE
volume day at 1.5 billion with a volume ratio improving to 62 and advancers over
decliners by +386. The Nasdaq had less of a relative volume increase but still
big at 2.1 billion which equates to 1.05 billion in NYSE volume. The volume
ratio was 64. Hopefully, this indicates a push higher into the upper end of the
box resistance for both the SPX and NDX.

Stocks
Today

(September
Futures)

Fair Value

Buy

Sell

8.00

Â 9.30 Â

Â 6.90Â Â

Have a good trading day.

Thursday’sÂ S&P 500 five-minute chart
with 8-, 20-,
60- and 260-period
EMAs

Thursday’s NYSE
TICK five-minute chart

Bottom Of The Box

BUY THE FEAR, SELL THE GREED

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