Buy ‘Em Up Five, Sell ‘Em Down 10

April 4, 2001
Kevin Haggerty

Next
day, same extreme downhill slope.
The major indexes opened down and continued a knife move until they hit the 2.0
Volatility Bands and made an attempt to rally.Â

The Nasdaq 100
(
NDX |
Quote |
Chart |
News |
PowerRating)
hit its first intraday low of 1413.44 vs. its 2.0 Volatility Band of 1412.44.
From there, you got a 1,2,3 close entry that only carried to 1449 — not even a
50% retracement of the initial down move. Then it was hard selling and programs
taking the index down to a low of 1390.10, closing at 1399, -7.8% on the day.

The S&P 500
(
SPX |
Quote |
Chart |
News |
PowerRating) was
similar, trading down to its first intraday low of 1114.42 vs. its 2.0 band of
1111 where it gave you a reversal entry, but failed to even make the .38
retracement. It hit 123, then declined straight down to 1100, closing at
1106.46, -3.4% for the day.Â

The Dow danced with them
also, down -3%. There were reversal entries from a key inflection point but just
enough upside to get out on the way back down. There were obviously many
continuation short opportunities in the QQQs, SPYs and DIAs, in addition to
trade-through shorts in stocks like
(
JNPR |
Quote |
Chart |
News |
PowerRating) a second-entry short and QCOM
among others.

During the day, down volume
exceeded up volume by 13 to 1 at one point. It finished with total volume of
1,387,000,000Â with 1241 down and just 126 up, which was a 9.8 to 1 ratio.
This is the most we’ve had yet. The volume ratio was only 9 with decliners over
advancers by 1619.Â

The 1088.50 S&P 500
future low with the corresponding 1081 SPX low are the raiders’ targets today.
You have to decide how you will play it. If they take out the low and then
quickly reverse it, be ready to go long — and stop yourself and go short if the
rally fails, and they give you a second entry short below 1081 on the SPX.
Maybe they will surprise us and give us a
long day today after the two big downs?

(June
Futures)

Fair Value

Buy

Sell

8.30

.9.90Â

Â 6.70Â

Pattern
Setups

Yesterday’s fear day sent
all of the Gold stocks, Utilities and a few stray Food stocks to the top of the
S&P 500 screen and this is not really daytrade ammo.Â

Next,
I would turn the list upside down and pick some names that were pummeled and the
marketplace is trying to make “Teenagers” — to join
(
CSCO |
Quote |
Chart |
News |
PowerRating),
(
ORCL |
Quote |
Chart |
News |
PowerRating),
etc. These stocks were all down more than 10% and can give us a quick reflex
rally, and at worst case another continuation short on their way to Teenager
status. These are the stocks where
they take them up 5, sell ’em down 10. We want part of that action both ways.

As
I mentioned yesterday, continue to focus on the QQQs, SPYs and DIAs, as they are
trading very geometrically and continue to react at extreme Volatility Bands,
Fib extensions and retracements, in addition to old reliable Trap Doors and Slim
Jims. Continuation shorts below swingpoints and out of small consolidations keep
you in the direction of any down move.

FYI,
Trap Doors work both sides of the zero line.

Have
a good trading day.