Choppy

May 3, 2001
Kevin Haggerty

Another
plus day for the
(
QQQ |
Quote |
Chart |
News |
PowerRating)s —
+1.9% and +11.4% in four days. High to low off the 33.60 bottom on 4/4/01 is
+47% in just 20 days. The
S&P 500
(
SPX |
Quote |
Chart |
News |
PowerRating) started a rally from its 3/22/01 bottom of 1081 and made a
higher bottom of 1092 on 4/4/01, which was a positive divergence. The 1081 low
was at the longer-term .786 zone. High to low, the SPX is +17.8% in 29 days.

The Equipment
Semiconductors all faded yesterday and finished red, as did
(
NVDA |
Quote |
Chart |
News |
PowerRating), pulling
back from its new highs.
(
BRCM |
Quote |
Chart |
News |
PowerRating) continued the explosion from its base and
advanced 5.4 points to 48.35. The
Brokers also had another good day while the Energies sold off. The OSX backed
off the last two days after advancing 28% in 19 days.Â

The SPX is up 2.5% the past
four days with the highest close being 127.05. It has bumped up to this .618
retracement level of 127 four times on the intraday charts since 4/30/01 but we
expected it to be choppy from 127-132.14 which is a converging resistance zone.

It was encouraging to see
(
CSCO |
Quote |
Chart |
News |
PowerRating)
pop yesterday on significant volume as it had a gap up that held, closing at 20
(+12.5% on the day) and one of the top six stocks in the S&P 500. It also
closed above the 50-day EMA for the first time since last December. Yesterday’s
close also completed a 1,2,3 bottom pattern so it should now be on your daily
radar until — and if — the pattern fails. I will include the daily chart in
Friday’s text.

The leader in the clubhouse
of the NDX yesterday was
(
CMGI |
Quote |
Chart |
News |
PowerRating) (+39%) on seven times its normal volume. Go
figure. There has obviously been big short-covering in the dot-coms and related.
The dot-com index is +70% off its bottom and the IIX is +64%. I am sure there
are many retail-type traders out there jumping back into these stocks, thinking
“Repeat.” Needless to say, beware.

Stocks
Today

(June
Futures)

Fair Value

Buy

Sell

4.50

5.80

3.20

Travel Range stocks: You
are always looking long or short in these stocks on an intraday basis. Right
now, the S&P futures are -8 and the NDX futures -25, so if that holds we are
focused on the closing range bottoms of these stocks as a starting point for
shorts. If they surprise and head north, you know where yesterday’s highs are.
The stocks are:Â

Have a good trading day.

Chart 1. Five-minute chart of
yesterday’s S&P 500
(
SPX |
Quote |
Chart |
News |
PowerRating) with 8-,
20-, 60-
and 260-period EMAs.

Chart 2. Five-minute
chart of yesterday’s New York Stock Exchange ticks.

Choppy

BUY THE FEAR, SELL THE GREED

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