Choose Trades Carefully
I guess we’ll never have another down day. Now, you know that’s not the case. As of last Friday the S&P 500 was up 7% year-to-date. After the window dressing Monday, Tuesday, and Wednesday, the index was up 11% on the year (as of June 30). Institutions picked up 4% in the last three days of the quarter. It must be magic.
We got the expected early down move yesterday as the inflated market-on-close prices came back to reality. GE, which had closed at 113 on market-on-close action on Wednesday, opened at 112 1/16 and traded down to 110 13/16 before closing at 111 5/8. TXN, which had closed at 145, traded as low as 141 before closing at 141 7/8. After that, the market drifted until more program money went to work in the last hour-and-a-half of trading, with the Dow closing above 11,000 and the S&P making another new high–the fourth higher close in a row, with a major push from the six-month-ending programs. We’re pushing the envelope with an up move today.
Long position trades among the major S&P 500 stocks are not where you want to be over the long weekend. I hope my commentaries over the last few days have helped you understand what goes on during these key window-dressing times. There are some major differences in the markets and you have to be prepared for them.
Target Stocks Of The Day Try to stay clear of stocks that still look inflated. Stocks I’m looking at include: Vodaphone [VOD>VOD]; Infoseek [SEEK>SEEK], which has been forming an eight-week base right at its 50-day moving average and 200-day moving average and has lots of room on the upside; watch Amgen [AMGN>AMGN] if they come for it, if not, try to get it on a pullback to the 200-day moving average; America Online [AOL>AOL], which has a great head-and-shoulders pattern right at the 50-day moving average and above the 200-day, and Avnet [AVT>AVT].
| Program Trading Numbers | ||
| Buy | Sell | Fair Value |
| 12.95 | 9.25 | 11.10 |
Editor’s note: If you want to learn more about Kevin Haggerty’s trading strategies, click on the link below to go to his new series of tutorial articles.