Check Your Index Screens

October 24, 2000
Kevin Haggerty

After
three wide-range bars up, both
the Nasdaq 100
(
NDX |
Quote |
Chart |
News |
PowerRating) and S&P 500 put on the brakes as the NDX ended
-1.01% and the S&P 500 -0.9%. Nasdaq volume was the lowest in ten days but
up volume still more than down volume. NYSE volume was reduced but still over 1
billion and the volume ratio neutral at 49. The
highs of the day for both indexes was just before 11:00 a.m. and then trended
down until 3:00 p.m. when the NDX rallied +1.8% from 3378 to 3438, closing at
3422 and the S&P 500 rallied 10 points before closing at 1395.79.

By now, you should be
checking the S&P 500 and
NDX 100 screens every day to do your homework and
find out what’s really going on. This
morning I will take you through the process. The screens are defaulted to volume
relative to the 30-day average daily volume, but can also be sorted by
percentage gain or where the stocks finished in the range in descending
order under the column CR1. First, I look at the volume leaders to determine
where the money flowed. Next, I look at those stocks that closed above the
midpoint of the daily range.

I then check the range
column to check which stocks had an expansion of range relative to the ten day
average daily range column. If I now have a stock that closed up
on increased volume, above the midpoint with expanded range, I move over to
check the 20-, 50- and 200-day EMAs. The
strongest stocks will be above all three EMAs and then you drop down to those
below the 20- and above the 50- and 200-EMA.Â Â Â

By now, you have zeroed in
on the results of the buying and selling pressure from the previous day’s
action. You then go to the daily charts to see which of these stocks have the
best pattern setups and if they do, go to your intraday charts to see where you
might get early entry preceding a trade-through entry above the previous day’s
high if buying, and below the low if selling. When you look at the screens, you
check the overall dynamics for group strength. Was there increased volume and a
percentage move in more than one stock in a group? The more stocks closing above
the midpoint, the stronger the market that day. Reverse for sells.Â Â

After I have reviewed those
stocks, I move over to those stocks that didn’t have increased volume percentage
or expanded range, but did close above the midpoint and preferably in the top of
the range. This will get you those stocks that might be in contracting
volatility patterns or getting ready toÂ break out of a consolidation
pattern. It is just a process of elimination from strength to weakness.

You will find many of the
best long trades from stocks that have increased volume, expanded range, close
in the top of the range and are above all three EMAs or for sure both the 50 and
200. This whole process looking for shorts is reversed unless you are looking
for airpocket shorts in stocks that are way ahead of themselves.

face=”arial, helvetica”>(December Futures)
Fair Value	size=2>Buy	size=2>Sell
12.05	13.40	10.95

Pattern
Setups

Have a good trading day.

src=”https://tradingmarkets.com/media/images/comms/haggerty/kh102400-01.gif”>

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Check Your Index Screens

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