Inside Trading
Yesterday certainly didn’t tell us much. The NASDAQ dropped 2% while the Dow rallied 72 points on a few of the old-line basics. The S&P 500 finished flat, unable to mount a rally past the 1302 level, which was resistance from Friday (take a look a five-minute chart).
The carnage in the Internet stocks continued, with some of the institutional Nets off 12-16%, including YHOO, CMGI, and EBAY. AOL, off 9.2%, was actually the best of the litter. It’s a good day to see how your favorite mutual funds did: You might notice any concentration in the Internet stocks by the funds’ performance yesterday. Always good to check.
Volume was again light, breadth was negative, as was the up volume/down volume ratio. The institutions can just sit back and add to positions by scaling down and being only a percentage of the stock’s volume. It’s a buyers’ market, as the momentum buyers are still on vacation and we wait for Greenspan’s 99th appearance in 100 days.
Yesterday was just an inside day for the S&P 500 and did nothing to change the levels I mentioned yesterday. We’re again starting the day out on a positive note, with the S&P futures up. Bonds also picked up yesterday and I also noticed a pick-up in utility stocks. Maybe the surprise today will be a bond rally.
Target Stocks Of The Day  Stocks that set up yesterday are Applied Materials [AMAT>AMAT], Watson Pharmaceuticals [WPI>WPI], Air Products [APD>APD], Honeywell [HON>HON], a narrow-range pattern right at its highs, and Avon [AVP>AVP].
Stay with Computer Sciences [CSC>CSC] if you get entry. Also watch Sun Microsystems [SUNW>SUNW] and IBM [IBM>IBM], which is a narrow-range pattern set up to move if we get any enthusiasm.
As I mentioned yesterday, it’s easier to play the short side with the QQQs, SPDRS, etc., because you can sell on down ticks, you don’t have to pick one stock (the market is very erratic–up one day, down the next). The good thing about trading is that we react, we don’t predict.
Program trading numbers  Buy: 15.75. Sell: 11.20. Fair Value: 13.55.
Editor’s note: If you want to learn more about Kevin Haggerty’s trading strategies, click on the link below to go to his new series of tutorial articles.