Capture The Aggressive Action

December 11, 2000
Kevin Haggerty

Big
gap-up opening on the Nasdaq 100
(
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PowerRating) Friday
as it opened at 2840, +4.4% from the previous close and never looked back after
pulling back three bars to an intraday low of 2803 and then trading up to a
spike high of 2915 before closing at 2895. That was a +6.4% gain on the day and
is a 20% run in seven days from the 2426 low and the .618 RT alert zone.

Friday was another gap-up
day where the entire day’s range was above the previous day’s, which is
positive. The S&P 500 hit a high of 1380.33, right at its 50-day EMA of
1380.35. The 200-day EMA is 1415.45, in addition to resistance at the 1420
level. The .618 RT from the 1294 low to the last significant swingpoint high of
1437 is 1383.Â

The down trendline drawn
from the 1530 swingpoint high through the 1437 swingpoint high is at about 1390.
This is quite a bit of converging
resistance the S&P 500 must get through before it has some room to run. From
what we have observed so far, the catalyst will certainly be the coup de
grace in Florida, if that happens this week.

The chosen ones which have
shown some positive divergence prior to their blow off on Friday, blew it out
the top with major percentage moves with
(
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PowerRating) leading the way +19.2%. In
fact, 27 of the NDX 100 had percentage gains of 10% or more. The Generals have
taken the financials and basics starting mid-October, so their perception was
one of a soft landing and lower rates.Â

As I have repeated several
times, you must be all over the semis every day, looking for setups on the
daily and intraday charts. Even if it’s just a rally in a bear market, there is
significant percentage room in a rally back to the 200-day EMAs and .38 RT
levels in many of these stocks. If the Generals continue as a herd, which is
consistent with past performance, we will witness more of these explosive semi
rallies and, of course, the ensuing airpockets that will occur. That’s just how
the semis trade, so get used to it!

I was also encouraged by
the 10.1% move in the biotech index which had retraced to the .618 RT level on
11/17, then recrossed the 200 to the upside, consolidated some at the 200, then
exploded on a wide-range bar Friday, closing in the top of its range and above
the 20-, 50- and 200-day EMAs. This was also after breaking the down trendline
from the 788 swingpoint high on 11/3 through the most recent swingpoint high of
656. Needless to say, stay all over those biotechs that exhibit the same trend
as the BTK. I will continue to highlight any setups in these indexes on a
daily basis, but you must scroll your intraday charts to capture the aggressive
action by the Generals.Â

Friday’s action was
excellent follow-through on Tuesday’s explosion. Friday’s total volume was 1.4
billion with a volume ratio of 75 and advancers over decliners by +1263. The
titles on trading books should be changed to How to Gain an Edge at the
Casino, because that’s what the day-to-day has become. For example,
(
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PowerRating)
for the past seven days has gone from 72.125 to 122.125 in five days, or +69%.
Then, in one day, it declined to 96.4375, -21%, and then the next day up to
118.875, or +23%.

These kind of moves make it
imperative that you learn how to day trade, even if it is to trade around
long-term positions, if there is such a thing any more.

face=”arial, helvetica”>(March Futures)
Fair Value	size=2>Buy	size=2>Sell
22.25	23.60	20.75

Pattern
Setups

Have a good trading day.

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Capture The Aggressive Action

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