If The Tape Is Right Today, Be Ready On These Stocks

• June 26, 2003
• Kevin Haggerty

What Tuesday’s Market Action Tells You

The
morning trend was up yesterday to 11:05 a.m. ET, then went sideways to just
before 2:00 p.m., and then we had the Federal Reserve dance and decline into the
close. The semi equipment stocks came out strong early, with
(
KLAC |
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NVLS |
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and
(
AMAT |
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(
SMH |
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(
MCHP |
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trade-through entry in
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GILD |
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GENZ |
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TEVA |
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TARO |
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(
ERTS |
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so the morning provided opportunity. 

For Active Traders

NYSE volume was relatively light at 1.3 billion,
volume ratio of 46, and breadth +313. In the sectors, the OIH was +1.0%, and
both the BBH and XBD finished small to the green side. The SPX
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$SPX.X |
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closed at 975.31, or -0.8%, with the longer-term head-and-shoulder resistance
drawn from the 1998 low at 960 and the 12-month EMA down at 936. The
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SMH |
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closed at 27.71, -0.5%, after opening at 27.85 and trading up to 28.47. Take it
any way you can get it. The .382 retracement to the last primary low of 20.36 is
27.84, so this zone had some bounce, with the low being 27.49 on Tuesday, and
the 200-day EMA below at 27.08. 

There was no real buying pressure thread in the
S&P 500 screens from yesterday’s action. Only 12 stocks in the S&P 500
closed in the top 25% of the range, while over 300 stocks closed in the bottom
25% of the range. That always determines how you approach the trading day,
either downside continuation breakouts below yesterday’s lows, or maybe some
closing range breakouts if it’s a reflex up this morning. The better upside
trade would be taking out yesterday’s lows, shaking the tree, and then a
reversal of those lows. In the NDX 100
(
$NDX.X |
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the top 25% of the range. 

Increased group volume is really only evident in
some of the biotechs, like
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ICOS |
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(
GILD |
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MLNM |
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CEPH |
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HGSI |
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GENZ |
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AMGN |
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IDPH |
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BGEN |
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they’re involved in a deal.

Today’s Plan Of Attack

The SMHs
and semi equipment stocks, along with MCHP, are certainly stocks to focus on
today, especially on any early weakness. Stocks that are bumping up against
their highs that should be on the list are
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MRVL |
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AVID |
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(
ROOM |
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USAI |
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(
SNPS |
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(
TEVA |
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(
EBAY |
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(
ERTS |
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(
ZBRA |
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These stocks are within striking distance of the highs, so if the tape is right
today, there might be some games played in some of these stocks, so you should
be ready.

Also, keep the brokers mentioned yesterday on the
list today. 

Any carryover weakness early today from the
“no reason” decline on the Fed rate cut will be better to buy than to
sell because of the end-of-the-quarter time period and retracement levels. 

Have a good trading day.

Kevin Haggerty