Here’s Where Some Money Is Being Put To Work

February 13, 2003
Kevin Haggerty

After
the SPX
(
$SPX.X |
Quote |
Chart |
News |
PowerRating) broke the early 5 point range on the 10:20 a.m. ET bar,
it was trend down for the day, but not
without opportunity. The first intraday low was 822.94 on the 11:20 a.m. bar,
right on the 823 .707 retracement to the October low from 954.28. The reflex
carried up to 827.60, setting up a net minus Fibonacci retracement short. 827.53
was the .50 retracement to the intraday high of 832.12 on the 9:30 a.m. bar. 827
is also the .50 retracement to the 1982 low, and it was also at a declining 60
EMA, which is the same as the 20 EMA on a 15-minute chart. This decline carried
down to an intraday low of 818.54, closing at 818.68, -1.3% on the day. The Dow
(
$INDU |
Quote |
Chart |
News |
PowerRating) lost 1.2%, the Nasdaq
(
$COMPQ |
Quote |
Chart |
News |
PowerRating) was -1.4%, and the
(
QQQ |
Quote |
Chart |
News |
PowerRating)s were -1.4%.

NYSE volume was 1.2
billion, a volume ratio of 19, and breadth -1163. The
(
SPY |
Quote |
Chart |
News |
PowerRating) volume of 36
million was the lightest since Jan. 17, and the QQQ volume of 52 million the
least since Jan. 14. I guess you could call the decline into this .618 to .786
retracement zone to the October 769 low a fear drift with market paralysis.

Feb. 14 and 17 are key
time dates, and the major indices are in a significant retracement zone, but we
have yet to see anything resembling a change-in-direction day on significant
volume followed by a second day with a higher low, high and close. With the
barrage of news, I imagine most portfolio managers are hiding under their desks
in New York or out buying duct tape or maybe even gone skiing in Utah to get
away from the New York subways for the next few days. On top of that, we have
the news channels telling us 24 hours a day that North Korea can now nuke the
United States and that this is a major crisis. Never once do they tell you about
our intercept capabilities, and the fact that North Korea would cease to exist
if they ever attempted to lob one of their nuke missiles, which is not even a
lock to make it to the United States anyway.

Having said that, the XAU
was down again yesterday by -4.5% and is now -14% high to low in 13 days. This
retracement sets up a potential long trade, as the XAU closed at 71.24 yesterday
and had an intraday low of 71.09. The 200-day EMA is 70.37, and 70.50 is the .50
retracement to the most recent significant low, which was 58.73 on October 17. I
will be alert for any intraday long setups in this zone and use a vehicle like
Newmont Mining
(
NEM |
Quote |
Chart |
News |
PowerRating) to play it.

I have also initiated a
long combo on the QQQs, which in effect bought them at, worst case, a 15%
discount to 24, which is equivalent to buying the Dow down at 6635 relative to
its price when the QQQs were done. My trading plan is to do more if the market
cracks, and each time entering a longer-term position at a significant discount.
This combo has an upside ceiling of 41% based on where the premiums were sold
with a +20% return if unchanged.

Have a good trading day.

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

Five-minute chart of
Tuesday’s NYSE TICKS

Here’s Where Some Money Is Being Put To Work

BUY THE FEAR, SELL THE GREED

Quick Links

Company Info

Contact

Company Resources