It’s That Time Of The Month Again!

October 29, 2003
Kevin Haggerty

What Tuesday’s Action Tells You

It was a Moonshot day for the Generals,
especially in the last hour-and-a-half. I said if they could, they would, and
now they have coming into month’s end, which happens to be a key month for some
of the largest mutual funds. It just so happens they are very overweighted in
technology, especially semiconductors, and what surprise, the
(
SMH |
Quote |
Chart |
News |
PowerRating)s led the
major sectors yesterday at +5.5%. It was an “in-your-face move” by the Generals
who I am sure got accelerated by the hedge funds. (That’s right, folks, not the
specialists, who probably got run over by the Generals once again in many of the
various semis and technology stocks that had huge moves.)

For Active Traders

This corner’s interest into month’s end was INTC
and the
(
QQQ |
Quote |
Chart |
News |
PowerRating)s. (See the
Oct. 27 commentary.) The interest in INTC was
because of the pullback setup at the 20-day EMA and an obvious top-10 holding of
the mutual funds and the QQQ because of the positive divergence in strength and
volume on the last-hour rally into the close on Friday. Also mentioned in that
commentary was that there were the right daily chart setups at the 50- and
20-day EMAs that would bring technical traders into the game if the Generals
pushed price. They did.

FYI: This corner gave the Generals 1/2 of each
INTC and QQQ position and the other 1/2 will be given to them tomorrow, or at
the latest on Thursday, depending on how the game is played. “Sell when you can,
not when you have to when it’s a short-term trade.” Bank part of the trade and
ride the rest with a tight stop.

Right from the start yesterday on the gap up
opening, the SPX
(
$SPX.X |
Quote |
Chart |
News |
PowerRating) held at +6 – 8 points up through 2:30 p.m. ET
when the real push started. TRIN was below .85 the entire time prior to 2:30
p.m., and the three leading sectors then were the SMH, XBD and RTH. Looking at
the table, you can see that they also led on Monday and again yesterday.
Technology was clearly the winner, with the Nasdaq
(
$COMPQ |
Quote |
Chart |
News |
PowerRating) +2.6% and the
QQQs +3.4%. The NYSE volume did hit 1.6 billion shares and over 600 million
traded in the last 90 minutes of the session, and that certainly tells you that
there was a major agenda.

	Monday 10/27	Tuesday 10/28	Wednesday 10/29	Thursday 10/30	Friday 10/31	Net
Index
SPX
High	1037.75	1046.79
Low	1028.90	1031.13
Close	1031.13	1046.79
%	+.2	+1.5
Range	8.85	15.7
% Range	25	100
INDU	9608	9748
%	+0.3	+1.5
NASDAQ	1883	1932
%	+.9	+2.6
QQQ	34.25	35.38
%	+0.2	+3.4
NYSE
T. VOL	135	1.62
U. VOL	861	1.23
D. VOL	484	390
VR	64	76
4 MA	43	56
5 RSI	39	67
ADV	2168	2229
DEC	1050	1034
A-D	+1118	+1195
4 MA	-186	+422
SECTORS
SMH	+1.0	+5.5
BKX	-0.4	+1.0
XBD	+1.5	+2.6
RTH	+1.0	+2.3
CYC	+0.7	+2.0
PPH	0	+1.0
OIH	-0.4	+0.6
BBH	-0.9	+2.0
TLT	-0.2	+0.5
XAU	+0.5	-0.7

table legend

From a trading standpoint yesterday, the major
indices made a power move, which is up-sideways-up. It was a Slim Jim afternoon
in most anything you trade, and the Slim Jim breakouts in the last hour or so
were accelerated by the many buy programs that hit the market. Those of you that
have the Slim Jim module or seminar material know to increase your scrolling in
the afternoon for Slim Jims during the major trend days in either direction
knowing that there is a high probability for programs to accelerate the
directional move.

I have included a chart today of INTC, my focus
semiconductor mark-up candidate, which had a good Slim Jim move with the last
bar — big volume — on the close. KLAC also gave me the same Slim Jim pattern,
but with an imbalance to sell on the bell. The S&P E-mini Slim Jim breakout was
above the 1036 level, and that was a nice 10 point run to the 1046 high.

For Today

I am doing this Tuesday night for Wednesday so it
will get posted on the TradingMarkets site on time in the morning. It’s the
Generals’ game the last three days of the month, and if there is any
continuation, it will most likely be Wednesday and/or Thursday, as the
regulators do frown on that last day aggressive activity, which is a nice way to
say it, I guess.

Good short-term position index setups don’t occur
every day, and the one we just had was on a 3.5% pullback on the SPX to the
50-day EMA, and of course, with many in the crowd starting to “watch out
overvaluation chatter.” Now that the SPX has reflexed up +2.9% since re-crossing
the 50-day EMA on Friday, they all of a sudden become bulls again. The net net
is that there have been several decent two- to five-day position trade
opportunities in the index proxies/HOLDRs since August, but nothing has really
changed with the trend since the March rally after the retracement to the
October lows.

The SPX has yet to close even -6.0% or more below
the highest rally close, so there has been no reason for even the “go along/got
in pretty early/no options strategy investor” to push the fear button until at
least that happens, to start with. For the professional hedge fund manager or
professional trader that has to post some decent numbers for their investors at
year end, it is an entirely different perspective, and that means protecting
existing substantial gains and leaving nothing to chance, especially with all
that’s currently going on with terror and how fast fear can hit the market and
take those gains with it.

Have a good trading day,

Kevin Haggerty

It’s That Time Of The Month Again!

BUY THE FEAR, SELL THE GREED

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