Four Slam Dunks

August 9, 2001
Kevin Haggerty

The NDX hit its intraday
high on the 11:20 a.m. bar, while the SPX had already started down on the 11:00
a.m. bar. From there, the afternoon trend was straight down, passing all the
extension levels without giving you anything resembling a reversal entry
pattern, just continuation entry shorts. The
acceleration started on the 13:50 p.m. bar just prior to the Beige Book stating
the already known.Â

There were four big sell
programs on the half hour starting at 2:00 p.m., 2:30 p.m., 3:00 p.m. and 3:30
p.m. Whatever stocks they hadn’t shaken from the tree were bought up into the
close as NYSE Ticks went from -726 to +329 after the last sell program. The
volume expanded with the programs. The program gangs capitalized on a quiet,
fragile market and the Beige Book negative hype to leg masterfully into their
sell programs at the expense of the real market sellers which got accelerated by
the programs.

The NDX found a temporary
place to rest at the 2.618 extension level of the contra rally which was 1619.
This was also the low of the day and it was on the 3:20 p.m. bar but nothing
developed into the close. Total NYSE volume was only 1.1 billion which was about
average with a volume ratio of 19 and declines over advances by 692.Â

The Nasdaq totaled 1.6
billion which is about 90% of its average, volume ratio of 20 with breadth at
-1224. You are getting a quick chance to update the semis chart from yesterday’s
text. The SMHs went from 51 to yesterday’s low of 45.36 or -10.6% in just four
days after a bail out as the SOX traded up into its 200-day EMA of 661. This
follows the six day +24% rally from 41 to 51. As I said in yesterday’s
text, a 1,2,3 up move or a further retracement to at least the .786 level —
we know not which.

Both the NDX and SPX are
back to key alert zones. The NDX closed at 1626 which is the .618 retracement
level while the SPX closed at 1183 vs. its .618 level of 1171. The
pain for the SPX comes below the swingpoint low of 1165.54 and for the NDX below
1580.87. These are easy targets
for the program gang if the Generals step aside. Any washout below these levels
will probably rebound like a bungee cord into option expiration next week.

(September
Futures)

Fair Value

Buy

Sell

3.50

Â
4.60Â Â

Â 2.30Â Â

Stocks
Today

There are certainly not a
lot of daily chart setups and most all of the daytraders’ longs will come from
the intraday charts on reflex moves.

Have a good trading day.Â

Five-minute chart of
Wednesday’s S&P 500 with 8-, 20-,
60- and 260-period
EMAs

Five-minute chart of
Wednesday’s NYSE TICKS

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Four Slam Dunks

BUY THE FEAR, SELL THE GREED

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