Closing Out The Quarter
Monday we had a big up day followed by an inside day yesterday in the S&P 500. The June S&P futures finished unchanged, while the NDX futures gained three points on the strength of the techs. Whatever is going to happen will probably happen today, since tomorrow will probably be a quiet, trading-range session.
As I look at the screen right now, the Nasdaq Generals–Dell, Microsoft, Cisco, Intel–are all green, as are the Internets (Yahoo and Amazon are both up four points) and Amgen. The futures are up around two points, well into buy territory, so, barring any negative announcements from our friends Mr. Greenspan and Mr. Rubin, we should be up for the day.
Despite the Dow drop, many of yesterday’s stocks provided entry opportunities, including Texas Instrument (TXN) and Intel (INTC), which both made good moves trading over Monday’s highs even though they closed lower in their ranges for the day.
The bottom line on Coke (KO): It will reach a certain level and the Street will pull a positive story out of a drawer and up the stock will go again–just like IBM (IBM), Gillette (G), and a multitude of others. This micro-analysis of companies is creating as much volatility as the Globex futures, which force gap openings for no fundamental reason whatsoever. Although, having said that, the volatility is great for intraday trading or protected short-term trades.
Target Stocks Of The Day  Since we’re at the end of the quarter, stay with the favorite stocks. Look for intraday entry on your five-minute charts in Amgen [AMGN>AMGN], EMC [EMC>EMC], Schwab [SCH>SCH], Merrill Lynch [MER>MER], and MCI Worldcom [WCOM>WCOM]. Intraday breakouts to new highs could be especially good patterns.
Continuation patterns that look good include Lucent [LU>LU], Ascend Communications [ASND>ASND], Wal Mart [WMT>WMT], and United Technologies [UTX>UTX]. The institution will come for these stocks if we get follow-through today.
A few narrow-range patterns–only to be traded in the direction of the trend–are State Street Corp. [STT>STT], E-Trade Group [EGRP>EGRP], and CNET [CNET>CNET]. If you look through your charts, you’ll see many of these Internet stocks trade into very low-volatility, narrow-range patterns before they explode. The problem is having them trade through your entry point rather than gapping through it after a narrow-range day.
These stocks are tough to trade unless you have immediate communication, execution, and reporting capabilities–it’s too difficult otherwise. (You have to know you did the trade before you can exit the trade.)
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.