Helmets On

March 14, 2001
Kevin Haggerty

The
hourglass was turned upside down with
the Techs and Chosen Ones reversing Monday’s debacle as the Nasdaq 100
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closed at 1779, up 109 points or +6.5% vs. the -7.% on Monday. The Semis, which
clearly outperformed on Monday, opened up and stayed up, with the SOX finishing
+6.3%. The S&P 500
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bar at the intraday low of 1172, which coincided with the 1174 extension leg and
the .618 retracement at 1164.

We have had some good
reflex rallies from prior alert zones, so you should always be ready. There was
a 1,2,3 early entry above 1175 and a regular 1,2,3 entry above 1179. Today it
happened to carry through, and the program traders didn’t attack at 2:30 p.m. I
thought the overall market action was ugly for an up day.Â

For example, at 3:20 p.m.,
the SPX was up +1.3%, the NDX +6.1%, the Dow +0.7%, while at the same time the
volume was 558 million up and 574 million down, with -729 decliners over
advancers. They were negative the entire day until 3:45 p.m. when the up volume
went positive but the breadth remained negative.Â

The quality of the move was
not good, even with the 1.4 billion shares. That
didn’t prevent another good day for daytraders and some continuation entries
like the
(
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only if you were scrolling for them. JNPR
opened up, then went sideways in a trading range between 50 and 52, until it
broke out above 52 at 1:00 p.m., which was the first consolidation breakout to
new intraday highs.Â

Five-minute chart of
Juniper Networks
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with 8-period EMA, 20-period
EMA, 60-period EMA, and 260-period
EMAs

It
consolidated at 54 for a while, then broke out above 54, running to 59, closing
at 58 5/8, +18.3% on the day, +13.5% from breakout and it was the No. 1 stock in
the NDX 100.The breakout above 54 put it above all of its 8-, 20-, 60- and
260-EMAs on your five-minute chart.

I have also included a
daily and five-minute chart today on
(
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that had retraced .618 from an 83% advance, and was right at its 200-day EMA.
This put us in position to take the stock long or short, using the 200-day EMA
as the inflection point, using tight stops on either side of it.

Daily
chart of Lehman Brothers
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showing 10-day EMA, 20-day
EMA, 50-day EMA, and 200-day
EMAs

A.
3/12/01Â 60.75 low

B. 3/13/01Â LEH was trading at 63.23 at 11:55 a.m. just below its 200-day
EMA of 63.34.

Five-minute chart of
Lehman Brothers
(
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with 8-period EMA, 20-period
EMA, 60-period EMA, and 260-period
EMAs

1.
This is the 11:55 a.m. ET bar with a 63.35 high vs. the 63.34 200-day EMA. Entry
above the high took it out of the Symmetrical Triangle. The base of the triangle
and range was 63 so that
is good entry for short trade because it is also below 200-day EMA.

2.
Breaks out of triangle and above 200-day EMA and you take entry.

Yesterday, the brokers were
green all day and the trade was resolved to the upside as LEH traded up to an
intraday high of 65.74 from the breakout above 63.35. You won’t see that on the
chart at the high level because we did the charts early. This trade combined a
Symmetrical Triangle breakout on the five-minute chart in conjunction with the
200-day EMA and the .618 retracement on the daily charts.

When you get this kind of
setup it is usually a good intraday trade — and sometimes more.

(June
Futures)

Fair Value

Buy

Sell

13.25

.14.55Â

Â 11.85Â

Pattern
Setups

Right now atÂ 7:20
a.m. ET, the S&Ps are down 32 and the NDX futures limit down at -65. The
Globex is a place where manipulators gather — and it’s a shame what is allowed
to go on, because it totally controls the openings for the wrong reasons.

That’s
the high road, but if you are a daytrader who goes home flat every night, you
don’t care what games they play as long as they are extreme, so we can
capitalize on disruption and emotion.

This
early panic certainly takes away any continuation longs early on, but we still
want to focus on the strong stocks from yesterday to play any contra rally after
Trap Doors and/or Volatility Band setups.

I
guess my headline for March 12 was an understatement with Triple
Witch, Cycle and Full Moon, because the week’s not over. I’ve run out of
time, but I will talk about the scaling into the
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combinations tomorrow.

Have
a good trading day.

Helmets On

BUY THE FEAR, SELL THE GREED

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