Continuation

November 12, 2001
Kevin Haggerty

The
indexes finished flat with narrow-range days and
the lightest volume of the week on Friday. The NYSE volume was 1.095 billion
shares, it had a neutral volume ratio of 52, and breadth was +97. The Nasdaq
traded less than 85% of its average volume. Expect more of the same today, with
Veterans Day activity on the light side. Year-to-date, the Nasdaq is -26%, the
SPX
(
$SPX.X |
Quote |
Chart |
News |
PowerRating) is -16%, and the Dow -12%.

Several weeks ago, I
mentioned that if the Generals could, they would try to keep the averages
afloat. They also seem to have the help of our government that clearly doesn’t
want a stock market meltdown on top of the present state of affairs. We are also
in the strongest seasonal period. If, in fact, our markets are being artfully
influenced, just as the Asian markets have been for years, and the Generals try
to avoid more of an exodus to money market funds by the retail, then we must be
ready for continuation long trades in the primary stocks that move the major
indexes.

We start today with
closing-range triangles for both the SPX and NDX
(
$NDX.X |
Quote |
Chart |
News |
PowerRating) and a Slim Jim
for the
(
DIA |
Quote |
Chart |
News |
PowerRating)s, all on your five-minute charts. You should use those closing
ranges as your starting point today, long and short. For example, the SPX closed
at 1120.31. Above 1121.35 takes the SPX out of the closing-range triangle and
above the last swing-point high. You should then use the 89-day EMA of 1123 as a
key pivot point. The high Friday was 1123, and the low was 1111, which happens
to be the top of the 24-day range that the SPX broke out of on Nov. 6, so it
indicates a support level. Support
and resistance are just alert zones to me, as they are of such varying degrees.
The reality is that there are no support zones in bear markets and no resistance
levels in bull markets.

The
(
$SOX.X |
Quote |
Chart |
News |
PowerRating) went
flat on us Friday with no downside follow through after giving us a bonus -7.8%
decline from the primary alert zone on Thursday, which carried over to early
Friday morning. The
(
SMH |
Quote |
Chart |
News |
PowerRating)s closed at 40.58. If they break the closing-range
downtrend line above 40.80, they can be played from the long side intraday with
tight stops.

Stocks
Today

Have a good trading day.

Five-minute chart of
Friday’s SPX with 8-, 20-,
60- and 260-period
EMAs

Five-minute chart of
Friday’s NYSE TICKS

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Continuation

BUY THE FEAR, SELL THE GREED

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