Contraction Resolved

• June 6, 2001
• Kevin Haggerty

The
contracting volatility was certainly
resolved yesterday as there was a battery of buy programs all day which
accelerated the directon. The Nasdaq 100
(
NDX |
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Chart |
News |
PowerRating) gapped open at 1854, just
above the 1845 top side of the Symmetrical Triangle mentioned in yesterday’s
text, then traded through the 50-day EMA which was 1876 going into yesterday’s
trading — 1854 proved to be the intraday low.

The programs came almost on
the hour during the morning, and then in the afternoon they were on the half
hour. At 1:20 p.m., the NDX looked like it would give us the first retracement
of the day, showing us a Double Top short entry as it also traded below the
8-period moving average of the low. That lasted just three bars before getting
stopped out as the NDX ran from 1911 to 1938, closing at 1923.90. The
NDX closed up 4.9% and once again is pushing up to the top of its original range
which is the 1982 level. The breakout high the last time was 2074. The NDX has
had three ups and three downs within the 1982-1743 trading range, including the
two-day breakout up to 0274. 

The S&P 500
(
SPX |
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News |
PowerRating)
closed at 1283.57 as it popped back above the 1273 top of its trading range and
below the resistance and 1316 high. This sets up the 1273 level as minor support
and 1249.96 as the downside pressure point, along with the 50-day EMA of 1253.
Nothing bad happens until it gets below there!

Total volume was very light
at 1.1 billion when you relate it to the absolute price persistency of
yesterday. The volume ratio was excellent as you might expect, at 70, while
advancers led decliners by +896. The institutional blocks were also on the light
side at 21,227 which really doesn’t surprise me with all the programs yesterday.

Looking at the S&P 500
screens this morning, it’s not the kind of leader board as one would expect
after yesterday’s pricey performance. I expected more volume from some of those
big moves in various stocks. Looking at the NDX 100, you immediately see the
increased volume in the biotechs like
(
HGSI |
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(
IDPH |
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(
ABGX |
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(
MLNM |
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News |
PowerRating) — which are
among the top 20 on the list. The biotechs had a big gap-up day, although we did
get trade-through entry in
(
GENZ |
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PowerRating),
(
ABGX |
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News |
PowerRating),
(
AMGN |
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PowerRating) and
(
CEPH |
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News |
PowerRating) which was within 30 cents
of the previous day’s high.

Despite being extended, the
Generals came back to play continuation in the biotechs and I expect any shorts
in these stocks were forced to play on the long side.

Stocks
Today

In the biotechs, take the
same list from yesterday —
(
AFFX |
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Chart |
News |
PowerRating),
(
DNA |
Quote |
Chart |
News |
PowerRating),
(
GENZ |
Quote |
Chart |
News |
PowerRating),
(
HGSI |
Quote |
Chart |
News |
PowerRating),
(
AMGN |
Quote |
Chart |
News |
PowerRating),
(
CEPH |
Quote |
Chart |
News |
PowerRating),
(
ABGX |
Quote |
Chart |
News |
PowerRating),
(
PDLI |
Quote |
Chart |
News |
PowerRating) and
(
IDPH |
Quote |
Chart |
News |
PowerRating) — but be sure you don’t
take any first-entry trades today, especially around the opening hour.

Other stocks:
(
CTAS |
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News |
PowerRating),
(
CEFT |
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News |
PowerRating),
(
RFMD |
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News |
PowerRating),
(
BMET |
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News |
PowerRating),
(
VAR |
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News |
PowerRating),
(
VRTS |
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News |
PowerRating) (which only traded 71% of its average daily volume but
recrossed and closed above its 100-day EMA),
(
VRSN |
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News |
PowerRating),
(
LLTC |
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News |
PowerRating),
(
AMD |
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News |
PowerRating),
(
ADI |
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News |
PowerRating),
(
MU |
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News |
PowerRating) (in case
they try to raise it from the dead today),
(
MXIM |
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News |
PowerRating),
(
TMPW |
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News |
PowerRating),
(
GP |
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(
WY |
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News |
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(
GMST |
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News |
PowerRating),
(
AHP |
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News |
PowerRating),
(
LLY |
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Chart |
News |
PowerRating),
(
SGP |
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Chart |
News |
PowerRating),
(
ERTS |
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Chart |
News |
PowerRating),
(
FDC |
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Chart |
News |
PowerRating),
(
MMM |
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Chart |
News |
PowerRating) and
(
TYC |
Quote |
Chart |
News |
PowerRating). 

FYI, for you seminar
attendees, the VIX closed at 21.22 setting up a probable RST on the first close
above the high of the low day.

Again, programs will be
unavailable until early next week. Have a good trading day.

Five-minute chart of yesterday’s S&P 500 (SPX) with 8-,
20-, 60-
and 260-EMAs

Five-minute chart of yesterday’s NYSE Ticks