Generals Pick Their Levels

April 3, 2001
Kevin Haggerty

With no
buy programs or end-of-quarter games,
both the the Nasdaq 100
(
NDX |
Quote |
Chart |
News |
PowerRating) and S&P 500
(
SPX |
Quote |
Chart |
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PowerRating) looked like extreme
downhill ski slipes. The SPX, after an early 10-point advance to 1169.51,
declined 32 points or 2.7% before giving any indication of a reversal entry
which was right on the 1.5 Volatility Band. The pattern was a 1,2,3 lower bottom
with entry above 1138.28, then a 1,2,3 close above 1140.12.

Problem was: a good entry
at an inflection point, but no follow-through in the 3:00 p.m. – 4:00 p.m. time
slot. The index only advanced to
1146, closing at 1145.87. The NDX did essentially the same thing, advancing 25
points after the opening, then declined 95 points or 6% to the 1.5 Volatility
Band of 1499. The exact low was 1499.30. It gave you a 1,2,3 close entry above
1506 on the 3:05 p.m. bar, but only advanced to 1520, closing at 1516.58.

The BTK ended -7%, but you
don’t say, “As the biotechs go, so goes the economy,” as you do with
the Semis. I don’t think any
market move will be sustained without the Semis in one of the top leader spots.
None of the above stocks made new interim lows like the SOX and
all except
(
AMAT |
Quote |
Chart |
News |
PowerRating) had had previous runs of +75%-100% that started in
November and December.Â

After retracing 50%-62% of
these moves, the Generals threw some more money at them, such as MU running from
38.21 to 49.61 in five days on significant volume just two weeks ago before
they warned. That being said, the intraday volatility in the Semis is excellent
for daytraders because in addition to any continuation shorts, you will continue
to see sharp reflex rallies as the Generals pick their levels.

1.
Breakout Slim Jim 1 above 37.50

2. Breakout Slim Jim 2 above 40.00

(June
Futures)

Fair Value

Buy

Sell

8.60

.10.00Â

Â 6.90Â

Pattern
Setups

I
will say it’s a lot easier to trade the market proxies like the QQQs, SPYs and
DIAs than it is stocks, during a tape like we had yesterday, so stay focused on
those also.

Have
a good trading day.