Early Pivots

January 18, 2001
Kevin Haggerty

Kevin Haggerty’s audio commentary
will be back tomorrow. We apologize for any inconvenience.

The
Generals came to play the tech game yesterday
as the Semis and Chosen Ones exploded out of the gates. The Telecoms played
green also. Coming out red and staying that way were the RLX, XOI, OSX and the
Basics. Banks and Brokers were mixed. Most all of the Semis had double-digit
gains early and a few were up 15%-20%.

The S&P 500
(
SPX |
Quote |
Chart |
News |
PowerRating)
halted right at the numbers also. The intraday high was 1347 vs. the 1.5 band of
1350.17 and the down trendline. The 50-day EMA was 1342. You also had a .618
retracement to the 12/11/00 swingpoint high of 1389. There was certainly
convergence to overcome but it didn’t happen yesterday, as the SPX traded down
to an intraday low of 1325.80 after making a 1,2,3 top as it traded below 1342
for a nice short-side play. It closed ugly at 1329.50, right in the bottom of
its range, as the sellers were the stronger players.

Based on yesterday’s
closing patterns in the NDX 100 and the SPX, you should focus on the following
for today:

The SPX closed in an RST
buy pattern and gets going above 1331. Above 1332.43 puts it above all of its
20-, 60- and 260-day EMAs on your five-minute chart. Yesterday’s high was 1347.
The low was 1325.41, which is your short pivot. The
NDX 100 completes a 1,2,3 buy pattern above 2570.39, which also puts it above
all three of its 20-, 60- and 260-day EMAs. Yesterday’s low was 2539.09 and
below 2538.25 puts it below all of the same EMAs, so you now have your short
pivot.

After the Semis yesterday,
most traders would think it is logical for them to sell off today and that could
happen. However, all of you now, especially the breakout players that came in
during the bubble, realize that markets are perverse, not logical. That means
you should know your continuation entry points in case the Generals come back to
feed on the semis.Â

To a daytrader, a stock
like
(
AMAT |
Quote |
Chart |
News |
PowerRating) might seem overbought after a one-day 9% move, but to an institution
it’s a stock that closed at 48 1/8 down from a high of 115 last April and they
just want to build their position which most have already started, and they know
they have other buyers with them so they want to get volume in.Â

You obviously want to be
alert for any intraday pullback setups as you keep scrolling the Semis. I will
include a list tomorrow for the Semis from the different sectors and also a
heads-up on what brokerage firm/analyst can have the strongest news effect.
Unless they fail, you should scroll this list daily for setups.

(March
Futures)

Fair Value

Buy

Sell

11.00

Â 12.25

Â 9.30Â

Pattern
Setups

Not many good trading
setups from the daily charts due to the bottom-of-the-range closings, so it is
an intraday pullback day. Some stocks to focus on are
(
AMCC |
Quote |
Chart |
News |
PowerRating) (on a
continuation entry or a pullback to the intersection of yesterday’s gap) — this
stock should run into trouble between the 85 and 90 level.Â

Also
(
JNPR |
Quote |
Chart |
News |
PowerRating) closed at
136 3/16. Watch it for long entry crossing its 50- and then 200-day EMAs, or
take it short below yesterday’s low of 135 11/16 with a tight stop.

Have a good trading day.

Early Pivots

BUY THE FEAR, SELL THE GREED

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