Buy Programs Day Off

June 7, 2001
Kevin Haggerty

Yesterday,
both the NDX and SPX gave us closing
narrow-range inside-day patterns with closes at the bottom of their ranges. The buy programs
took the day off and the volume ratio and breadth was negative all day, with all
sectors red at the final bell. All three major indexes were off about 1% each.
Volume was a touch lighter than the previous day at 1.062 billion, with a volume
ratio of just 26, and decliners over advancers by 671. Institutional blocks also
declined from the previous day — to 19,897.

The Nasdaq 100
(
NDX |
Quote |
Chart |
News |
PowerRating)
had an extension move down from the quick leg up, which had ended at 10:00 a.m.
From the 1890 intraday low, you got a 1,2,3 close and then a 1,2,3 higher bottom
entry. That rally ended at a Fib retracement 1930 high, then went south again to
close at 1903.84. Some of the
Travel Range stocks and a few Semis led the rally off the 1890 low.

The NDX left us with
another intraday Symmetrical Triangle, as it did the previous day. So that’s
where we start framing our inflection points for today’s game. The downside
boundary is about 1900, followed by yesterday’s low of 1890. After
that comes the 50-day EMA at 1879; 1768 is the bottom of the range and a break
of that carries us down to the deeper Fib retracement and test of the 1349 low.
The upside boundary of the intraday
triangle is approximately 1922. If the NDX opens down and then trades lower
after that, look for a quick reflex move on the contra play, especially down
around the 50-day EMA.

The S&P 500
(
SPX |
Quote |
Chart |
News |
PowerRating) broke
a 4 point early range, trading below 1278 on the 10:10 a.m. bar, right down to
its 1269.50 intraday low. From there we got a Fib retracement to a 1277 high and
also to prior 1278 resistance, where it failed and closed down at 1270. This
morning we start with the first downside inflection point at yesterday’s 1269
low; then the 20- and 100-day EMAs are at 1268 and 1263 for some convergence;
and then below that the 50-day EMA at 1253, followed by the 1245.96 low which is
a 1,2,3 trend short entry and also the gateway to a Fib retracement of the 1081
bottom.

On the upside for the SPX,
our first inflection point is the 1273 top of the trading range and 1275, which
is yesterday’s intraday down trendline. Above that is 1280, the daily chart down
trendline, then 1286.62 which is the last swingpoint high the SPX has to clear
before challenging the 1316 rally high into the resistance.

By framing the alert zones
in advance, you are prepared to react to price action and the market dynamics,
rather than thinking about it and then looking back and saying "woulda,
coulda, shoulda."

Stocks
Today

On the short side because
you have it framed and it’s easy to read, work with the QQQs, the SPYs and
(
JNPR |
Quote |
Chart |
News |
PowerRating).

Program trading numbers will be
available again next week.

Have a good trading day.

Five-minute chart of 06/06/2001 S&P 500 (SPX) with 8-,
20-, 60-
and 260-EMAs

Five-minute chart of 06/06/2001 NYSE Ticks

Buy Programs Day Off

BUY THE FEAR, SELL THE GREED

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