Here’s Monday’s Setup

June 2, 2003
Kevin Haggerty

What Yesterday
Means For Today

Friday
was a party day for the Generals (institutions)
as they made sure May was a plus month,
making it two in succession. May ended at +5.1% from the April 30 close of 917
on the S&P 500
(
$SPX.X |
Quote |
Chart |
News |
PowerRating). The month of April gained +8.1% from the March
848 close. The first quarter of 2003 was -3.6%, so you can rest assured that the
major institutional money managers will do their best to make this second
quarter ending in June as good as they can push it up to be. With some new
retail money coming into the market late in this move chasing price, they will
probably be able to get that done.

The SPX went out at 964,
right at the 960 – 965 long-term resistance line, but above a rising 12-month
EMA for the first time since breaking down from the all-time 1553 high. The
moving average is at the 930 level right now, so nothing longer term negative
happens while price holds above it. The 200-day EMA is down at 911 right now.
That’s not the case, however, for aggressive market participants that play
intermediate- and short-term swings. Price just moved up to the longer-term
resistance line and just above at 975 sits an extended one-year volatility band
which is also the first important extension of the last primary leg down for the
SPX from 935 – 789, so I expect some churning and some opportunity in that area
for daytraders.

NYSE volume on Friday was
on the relative heavy side at 1.65 billion, the volume ratio strong at 79 and
now has a five-day moving average of 65 (above 60 is overbought, provided it is
not at the beginning of a move from an extended or significant bottom), breadth
was +1704 for a five-day moving average of +971. The previous two days were just
+211 and +529 coming into Friday’s end-of-month mark-up, with 2400 NYSE stocks
advancing and 696 declining. The SPX closed at 964, +1.5%, and the Dow
(
$INDU |
Quote |
Chart |
News |
PowerRating) at 8850, +1.6%, with 27 issues up and just two down, with one
unchanged. The Nasdaq
(
$COMPQ |
Quote |
Chart |
News |
PowerRating) ended the day +1.3%, and the NDX
(
$NDX.X |
Quote |
Chart |
News |
PowerRating) was +1.4%.

Today’s Major
Themes To Focus On

As expected, there was
increased volume in most of the top winners from the major money managers.
Unless there is a deal about to be announced, stocks like Novellus
(
NVLS |
Quote |
Chart |
News |
PowerRating)
— which had the fourth day up in a row on thrust and big volume, is now +24%
low-to-high in four days, breaking out of a daily chart symmetrical triangle on
volume — are vulnerable to downside air pockets.

The Plan Of
Attack For Today

For today, I would expect
the indices to move higher through the first few days of June as some new money
is put to work, and I see that the early pre-market futures are up for the major
indices, but as we know, that’s always subject to change. Yesterday’s closing
range Slim Jims for the major indices will be your first trading pivot today.
Any aggressive up move early today breaking above Friday’s closing ranges will
set up good intraday short opportunities in the major indices.

Have a good trading day.

Kevin Haggerty

PS
Spend a full weekend with me June 20-22.

Click here for details.

Five-minute chart of
Friday’s SPX with 8-, 20-,
60- and 260-period
EMAs

Five-minute chart of
Friday’s NYSE TICKS

Here’s Monday’s Setup

BUY THE FEAR, SELL THE GREED

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