Continue To Follow The Money

August 15, 2000
Kevin Haggerty

Monday
was an excellent trading day, as we got explosive multipoint moves in
most of the stocks that set up going into yesterday. The semis gave us that good
reflex rally, fueled by short-covering and reaction to an analyst telling you
that the semis are the place to be because of their margins. There seems to be
a duel going on between the various semiconductor-research analysts. Let them
battle, and we will just follow the money.

The SMHs, the semiconductor
HOLDRs, gapped open to 84 3/8, but then backed off to 83 1/16, the previous
day’s high which was Friday, and gave you a trade-through entry. The SMHs traded
up to 88.
(
TXN |
Quote |
Chart |
News |
PowerRating) and
(
TER |
Quote |
Chart |
News |
PowerRating) also gave you excellent Slim Jims if you saw
them while you scrolled your five-minute charts, which you should be doing —
especially in a group that was the strongest of the day.
(
MWD |
Quote |
Chart |
News |
PowerRating) celebrated
its new territory above par, but that’s no surprise.

The averages advanced again
on very light volume and very strangely, I might add, as it was primarily
futures-induced rather than the Generals lined up to buy stock in size. I would
love to see the S&P futures audit trail of the brokerage firms that are
major contributors to the Democratic Party. Early in the day, the S&P 500
came out of the closing range below 1470, but only got to 1468.80 before
reversing back into the range for a period, before exploding out of the 1475
upper boundary. You were stopped out of the early short if you took it, but
rewarded if you then took the upside breakout.Â

The S&P 500 is at
resistance, but that can be taken out if they continue to run the futures for
the rest of the Convention, but there will be some Generals selling into this
move. As I said yesterday, this is an options-expiration week. Futures control
the action. Liquidity is thin, which all adds up to excellent opportunity if
your stock selection is good. Take the list I gave you yesterday,
and add the following names.Â

By combining the
five-minute charts with the daily charts, you will be ready to take advantage of
air pocket shorts like we got in ARBA last week. Nothing goes up forever, and
when the powers that be stop running these high flyers because they run into
real sellers, you will get a quick window to ride it down for the day and it
most often is a strong downside multipoint move. One thing you must remembers is
that the professionals will run in breakout buyers at every chance they can, and
that’s why second-entry trades are so important, because then you can see
whether the Generals are really buying the stocks.

face=”arial, helvetica”>(September Futures)
Fair Value	size=2>Buy	size=2>Sell
7.60	8.80	6.40

Pattern
Setups

Â Have a good trading day.

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Continue To Follow The Money

BUY THE FEAR, SELL THE GREED

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