Focus On The Chosen Ones For Both Longs And Shorts

September 21, 2000
Kevin Haggerty

There
were two markets yesterday for
the Nasdaq 100
(
NDX |
Quote |
Chart |
News |
PowerRating) and S&P 500. As I mentioned yesterday,
the neutral action didn’t complement the tech move on Tuesday. Early on
yesterday, the techs acted much better than the S&P 500.Â

The early bear trend for
the S&P 500 took it down from 1459 to an intraday low of 1431 or -1.9%.

The afternoon bull trend
started at about 1:30 p.m. and the index advanced 1.7% to 1455 before closing at
1451.35. That 1442 200-day EMA pivot point had a good workout. All
of the key S&P 500 stocks were artfully moved up in the rally.Â

The NDX 100 had great
travel range yesterday, dropping 3.1% in the morning from 3776 to an intraday
low of 3660, and then, like magic, advanced 4.1% to an intraday high of 3810.30
before closing at 3790.Â

Everyone has an axe to
grind in these stocks, and because of the higher price, extreme volatility,
reduced liquidity and good stories on these stocks such as fiber optics, etc.,
it is trader’s heaven every day. Once again, there were big program agendas, but
awful overall market action except for the chosen ones.

There was big volume of 1.1
billion shares, negative breadth and -603 decliners vs. advancers, with a volume
ratio of just 27 that included only 295 million up vs. 774 million down. This is
not what you like to see. There won’t be any sustained upside move unless the
breadth and volume ratio get in gear. The NDX although it ended +32 points on
the day, also had negative breadth and a volume ratio below 50.

MU is framed from the 29
1/8 low of 1/31/00 to the 97 1/2 top. The exact .618 RT level is 55.25. Micron
hit 57 7/16 on Friday. Yesterday I mistakenly said it was the .786 level, but
nevertheless that is still an alert zone.

INTC is framed from the
10/19/99 low of 32 1/2 to the 75 13/16 top. The .50 RT level is 54.15. INTC hit
55 1/2 on Monday.

When stocks get to these
alert zones, you can look first for: 1. An intraday buy pattern; 2. Continuation
trade above the high of the low day. You
are looking for the buying pressure to surface at these alert zones. If it does,
take the trade.

I will be covering this
topic at the TradingMarkets 2000 seminar in Vegas, in addition to the intraday
trading tree which takes you from pre-market, to opening, to intraday
consolidations and retracement zones. I will also cover the selection of stocks
to trade each day and how the selection from the daily charts is the same
procedure you use for position trades of any time frame. I look forward to
meeting you all and talking trading. This will be an excellent event that will
expose you to a cross-section of ideas and strategies. It is always easier to
clarify something in person as opposed to email.

face=”arial, helvetica”>(December Futures)
Fair Value	size=2>Buy	size=2>Sell
20.60	22.00	19.45

Pattern
Setups

On the short side, any of these
momentum stocks if we go south — and right now as I do this the futures are off
over 6 points — anything that breaks down below both the 20-, 60- and hopefully
the 260-EMA is a candidate for an airpocket short.

Remember, if you don’t get
continuation entry above the high of the previous day, you’re looking for that
pullback, trap door, retracement and pullback-and-go move in any of these
momentum stocks. Either way, these stocks are in play and will continue to be so
for a while.

Have a good trading day.

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Focus On The Chosen Ones For Both Longs And Shorts

BUY THE FEAR, SELL THE GREED

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