Game Of Games
Someone
told me yesterday that every
time Ari Fleischer finishes a press conference on either more anthrax or another
terrorist attack, or potential terrorist attack, that the futures rally. Not a
surprise. After the opening gap down yesterday, the ensuing rally brought the
major indexes back to equilibrium. The NDX 100
(
$NDX.X |
Quote |
Chart |
News |
PowerRating), led by the
semis, finished +0.9%, the SPX
(
$SPX.X |
Quote |
Chart |
News |
PowerRating) -0.2%, and the Dow -0.6%. NYSE
volume of 991 million was less than 85% of its average, with a volume ratio of
46, and breadth neutral at -67. The Nasdaq traded at just under 90% of its
average volume, but the volume ratio was better at 69, as the rally was
concentrated in about 1/3 of the NDX 100 stocks.
The
(
$SOX.X |
Quote |
Chart |
News |
PowerRating)
closed at 519, +2.5% on the day. The
(
SMH |
Quote |
Chart |
News |
PowerRating)s opened down at 39.10, then
rallied to an intraday high of 42.10, or +7.7% from low to high. That’s the same
intraday percentage they declined from the resistance area last week. Trader’s
nirvana. The key semis were pushed yesterday to make the SMHs go. Three stocks:
(
INTC |
Quote |
Chart |
News |
PowerRating),
(
TXN |
Quote |
Chart |
News |
PowerRating) and
(
AMAT |
Quote |
Chart |
News |
PowerRating) make up 50% of the SMH current weighting.
INTC is 20.4%, TXN is 16.9%, and AMAT is 12.3%. The percentage advances for
these stocks yesterday were INTC +2.0%, TXN +2.9%, and AMAT +1.0%. They all
traded more than their average daily volume. The
next three highest weightings are
(
ADI |
Quote |
Chart |
News |
PowerRating) 6.6%,
(
MXIM |
Quote |
Chart |
News |
PowerRating) 6.3%, and
(
MU |
Quote |
Chart |
News |
PowerRating)
6.05%. Much to no one’s surprise, ADI ended +2.3%, MXIM +2.0%, and MU +4.0%.
Whenever the perception
of the semis gets positive, as it has on three significant rallies since Nov.
29, 2000 — and all from lower lows, I might add — it attracts many large
players to the game. In addition to the real buyers, there are several very
large mutual funds that will squeeze the shorts as a strategy. Then you have the
hedge funds that will get in front of the buy call and try to accelerate price
so other buyers have to reach to get stock. There are also a couple of very
large hedge funds that have enough capital to squeeze a sector over a shorter
period of time, make their chop, go away, and then return when they see the buy
call build up again, as some of the real Generals buying returns. If you throw
in all of the program action, it means acceleration in whatever direction they
want the game to go.
Stocks
Today
After yesterday’s semi
action, we start today with some decent longside daily chart setups. They are
(
RFMD |
Quote |
Chart |
News |
PowerRating),
which gave us a good ride yesterday,
(
BRCM |
Quote |
Chart |
News |
PowerRating),
(
TXN |
Quote |
Chart |
News |
PowerRating),
(
AHAA |
Quote |
Chart |
News |
PowerRating),
(
KLAC |
Quote |
Chart |
News |
PowerRating),
(
MXIM |
Quote |
Chart |
News |
PowerRating),
(
ADI |
Quote |
Chart |
News |
PowerRating) and
(
MU |
Quote |
Chart |
News |
PowerRating).
I would be looking to
sell
(
SMH |
Quote |
Chart |
News |
PowerRating)s into the high end of the resistance zone up through 44.36, which
is the .618 retracement to the May high. You play the intraday longs, go home at
night flat, and then take the position short in the proxies for a good
reward-to-risk trade with stops just above entry. If it gets to the resistance
zone again, then that means you have had some successful long daytrades along
the way.
In the biotechs, look at
the
(
BBH |
Quote |
Chart |
News |
PowerRating)s, which had a three-bar pullback to just above the .38 retracement
to the September low, closed yesterday in the top of the range at 127.95, which
is just below the 200-day EMA of 128.86. Yesterday’s high was 128.90. The short
pullback was from 136 to 123.80, or 9.0%. Other biotechs to focus on are
(
DNA |
Quote |
Chart |
News |
PowerRating)
and
(
CEPH |
Quote |
Chart |
News |
PowerRating).
In the brokers, I like
(
LEH |
Quote |
Chart |
News |
PowerRating),
(
LAB |
Quote |
Chart |
News |
PowerRating) and
(
GS |
Quote |
Chart |
News |
PowerRating).
In the metals,
(
AA |
Quote |
Chart |
News |
PowerRating)
and
(
PD |
Quote |
Chart |
News |
PowerRating).
In the retail,
(
WMT |
Quote |
Chart |
News |
PowerRating)
and
(
LOW |
Quote |
Chart |
News |
PowerRating).
Other stocks that set up
are
(
BEAS |
Quote |
Chart |
News |
PowerRating),
(
IBM |
Quote |
Chart |
News |
PowerRating),
(
ATVI |
Quote |
Chart |
News |
PowerRating),
(
SYMC |
Quote |
Chart |
News |
PowerRating),
(
THC |
Quote |
Chart |
News |
PowerRating),
(
ADP |
Quote |
Chart |
News |
PowerRating) and
(
CIEN |
Quote |
Chart |
News |
PowerRating).
The early read on the
futures is green. The S&Ps are up 12, and the NDX +32, so we’ll probably
start from the top and work our way back today.
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
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