Homerun

June 17, 2002
Kevin Haggerty

Thirty
minutes of panic on Friday, then a signal bar at a sequence low, followed
by a 27 point rally in the SPX
(
$SPX.X |
Quote |
Chart |
News |
PowerRating), and you didn’t come close to
getting stopped out. It doesn’t get any better. Did you buy your ticket to the
game?

The intraday low of
981.63 came on the 10:00 a.m. bar, which was also the signal bar, with a close
in the top of the range. It was a Trap Door with sequence and extreme volatility
bands, along with a defined entry. The 2.0 extension down of the leg up from
1002.58 on June 12 to 1023.47 on June 13 was 981.69. I noted in the June
12 text that 982 was the parallel line move completion where AB=CD. As you
read in the June 12 text, the
(
SMH |
Quote |
Chart |
News |
PowerRating) 1.618 extension of the leg up to 44.80
is 31.29. The SMHs hit a 31.25 low on Friday before rallying to close at
33.44.Â

At day’s end, NYSE volume
was 1.55 billion, a volume ratio of 38, and breadth -286. The Dow
(
$INDU |
Quote |
Chart |
News |
PowerRating)
was -0.3%, SPX -0.2%, and the Nasdaq
(
$COMPQ |
Quote |
Chart |
News |
PowerRating) +0.5%. I would expect
Friday’s lows to hold this week and the reflex should carry higher. The media
will hype the earnings warnings and there will certainly be more hostile terror
events, so that should provide opportunity for the daytrader, and also the
position trader, where the first unit of a six-unit scale-down position buy of
the indices was completed on Friday.

With most of the
indicators oversold and indices at key inflection points, it should be no
surprise that the shorts were scrambling as the rally progressed, and we will
see more of that as we go.

Stocks
Today

Have a good trading day.

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

Five-minute chart of
Friday’s NYSE TICKS

Homerun

BUY THE FEAR, SELL THE GREED

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