Here’s What I See Happening At These Key Time Dates
Month-end activity
was evident yesterday as NYSE volume expanded
to 1.7 billion, and it looks like the Generals will make May a positive month,
as was April. The SPX cash index
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at 949.64 yesterday. Technology has been a leader in this rally so it doesn’t
surprise me that there was some selective buying in many of the Generals’ most
widely held and profitable stocks. You could see this as the Nasdaq Composite
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finished green at +0.8% and the NDX 100
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the session at -0.4% and the Dow -0.9%, closing at 8711. The early leaders in
almost any rally from significant longer-term bottoms are the semiconductors.
Chips make it all happen in the world. Yesterday the semis continued the advance
with the SMH +2.8%, led by Intel +5.6% on a 100% greater-than-average volume.
KLAC was +5% on 45% greater-than-average volume, NVLS was +3.5%, trading 95%
more than its average volume. In fact, seven of the top 20 percentage gainers in
the SPX yesterday were semiconductors and buying pressure was evident on
increased volume across the group. The SMHs have advanced +48% from the October
17.32 low.
In other sectors of note, the Biotech sector
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was -1.9% but had advanced 12% in four days and has given back just 3.3% in the
last 2 days. The Brokers
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since March 12, which is just 54 trading days and that is not sustainable much
longer before a good retracement.
For today, barring overt news, the Generals will
hold their major winners up and May will go out positive. Aggressive window
dressing by the Generals on the last day of the month is frowned upon by the
regulators. You can bet they will have some working buy orders in their primary
winners so they hold their current levels.
The SPX is right at the upper end of the
resistance line drawn from the 1998, 923 bottom through the 945, September 2001
low. During this basing period since the July 24 lows, the rallies have advanced
to the following rally highs: 965; 954 – which was the initial .236 retracement
to the 1553 all-time high from the October 769 low – so there is no reason why
not to expect some churning at that level. 935 is the next rally high and
now yesterday’s 962 intraday high. You can say that the market is at the top of
the box trying to get out. It’s been a “buy-the-weakness, sell-the-strength”
market all the way, and for aggressive traders this has been another opportunity
to do this for a percentage of one’s position as the major indices in most
sectors have moved too high, too soon, and are extended short and medium term.
Going forward, I see two key time dates on June
11 and 14, and I think the highest probability is for the major indices to sell
off into early August, which would be a much-needed retracement. The SPX has
traded closely in sync with its cycle since July and that also points down into
early August. Let the buyer beware. I would expect the 965 high to get taken out
as some new June money gets put to work, and you can bet some aggressive hedge
funds will force the move in front of the Generals.
The day trading was excellent yesterday, as the
first hour long strategies you have learned in the modules and at the
seminars kicked in during the first 20 minutes and the rallies in the major
indices and SMH made excellent moves. For example, the SMHs gained 4% from
entry above 28.94 to the 30.07 intraday high before one of the reversal sell
strategies gave you a pattern entry below 29.94 and you caught a decent move
down in the afternoon selloff.
Have a good trading day and have a good weekend.
Kevin Haggerty
PS
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