Encore?

• March 5, 2002
• Kevin Haggerty

The
follow through yesterday was on a surge in
volume and price. NYSE volume was 1.6 billion, or +30% above average, and the
Nasdaq was 2.3 billion, which was also about 30% above its average. The NDX
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$NDX.X |
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$SPX.X |
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Dow
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$INDU |
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the NYSE was 82, with 1.3 billion up and just 293 million down. Breadth was very
positive at +1315.

The
(
$SOX.X |
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+5.9%, which gives it a gain of about 17% in two days. We’ll look for intraday
shorts in semis if there are any reversal entry patterns. As expected, the
cyclicals were up strong; defensive stocks, such as foods, were weak. The
brokers exploded, as we said in yesterday’s
text, and any sustained move must
include the brokers. The
(
$OSX.X |
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for much bigger violence.

Surprisingly, we had good
trade-through entries in
(
MRVL |
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LTXX |
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(
LRCX |
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(
DPMI |
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(
BRCM |
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wall at the 200-day EMA zone. The Dow is very overbought and back to the 10,600
resistance where it initially broke down and retested its 200-day EMA back in
July of ’01. The SOX is certainly stretched out with emotion, while the housing
stocks are becoming accidents waiting to happen, just like
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NVDA |
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GNSS |
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Greenspan flooded the
markets with liquidity, taking rates to the lowest level in 40 years and not
without reason, I assume. The reality is that capital spending by corporations
must increase, along with real earnings. The NAPM, or now known as the ISM,
means bupkis. What’s manufacturing, 5% to 10% of our economy? Alfie doesn’t
have a choice. He’s trapped, and rate increases will be pushed by the majority
of hawks on his handpicked board if they sense this is really an economic
pick-up. The only thing that can slow that down is political jawboning. Fed
funds will not remain below reality, and that’s where they are now.

Stocks
Today

For today, absolutely no
interest in continuation longs in extended semis or other similar stocks. We’ll
look for intraday shorts in
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SPY |
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(
DIA |
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(
QQQ |
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you get a defined reversal entry pattern. There will probably be some decent
pullback long setups if price declines enough to force some shorts to jump in
and cover some stock. Futures are small red as I am doing this at 7:15 a.m.

Daily chart long setups
today, and I’m not thrilled by many of them, are
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CSC |
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BJS |
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SLB |
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CAM |
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(
BHI |
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Also,
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AVY |
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GD |
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(
DGX |
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SEBL |
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MERQ |
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STT |
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USAI |
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BR |
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PD |
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and
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FLR |
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Have a good trading day.

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

Five-minute chart of
Monday’s NYSE TICKS