Certification And End Of Month

November 27, 2000
Kevin Haggerty

The
defensive stocks were flat Friday as
the oversold techs and biotechs rallied into the 1:00 pm close. I would imagine
no shorts wanted to get surprised going into the weekend with possible Florida
soap-opera news.Â

We are now 12 weeks into
this recent decline which started 9/1, which was the .618 retracement level to
4147 for the Nasdaq 100
(
NDX |
Quote |
Chart |
News |
PowerRating) vs. the 3/24 4816 high. That is a 36% decline
from 4147 and a 45% decline from the 3/24 4816 high. The 2667 low last
Wednesday, put it 29% below the 200-day EMA of 3442, which is an extreme
oversold condition. There is room for a good oversold rally back to the 50-day
EMA of 3205 which is 20% from the 2667 or, if they really get excited, a 25%-30%
rally back to the 200-day EMA. As
a short-term trader, you just want to board the train when it changes direction
long or short.Â

The SOX, which topped out
before the NDX 100 has declined 56% from its March 14 high and is starting to
make some noise that it would lead a move if we get the oversold rally. Just a
run back to its 200-day EMA of 887 is a 31% advance. The SOX closed Friday up
8.8%.

The S&P 500 has
declined 15.9% from the 1553 March 24 high to the 1306 11/18 low. The index is
only 7.6% below its 200-day EMA and has positively diverged from the Nasdaq 100
(
NDX |
Quote |
Chart |
News |
PowerRating) which is itself undergoing a valuation purge and in many
camps is still too high, especially in the chosen ones.Â

Whether that takes the NDX
down to the 2496 .618 retracement level or beyond, we can’t know, but it’s not a
decision a daytrader has to make.Â

face=”arial, helvetica”>(December Futures)
Fair Value	size=2>Buy	size=2>Sell
6.45	7.70	5.25

Pattern
Setups

This morning, I want to give you a
wider list of stocks to put on your alert list and we should start with the
semis:

The SMHs, which made a higher
swingpoint low on Friday, closing at 58.49 just below its 200-day EMA of 58.98,
is an excellent way, as I have mentioned often, to play the group if you want to
make a position play.

A conservative way to play a
short-term tech rally from a position standpoint would be the XLK SPDR’s, which
closed at 38.20. They have held a double bottom of 37.06 since 11/13. If we get
a move, you have a good risk reward vs. the 37.06 double-bottom stop level.

As I look at the screen, the S&P
futures are up 13 and the NDX 100 futures are up 79, so we have a certification
bounce in process and also the end-of-the-month action this week so you will
have some excellent opportunities.

Have a good trading day.

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Certification And End Of Month

BUY THE FEAR, SELL THE GREED

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