It’s Window-Dressing Time
The Dow was up 90 points in the first 10 minutes with the gap-up opening yesterday, and finished the session up 103 points. The S&P 500 finished up 16 to 1331.35. At 648 million, volume was again light, but breadth was excellent, as was the up volume/down volume ratio.
Excluding energy, the sectors on my screen stayed green the entire day. The S&P played above the opening the entire session, which is a key factor when you’re entering stocks on intra-day pullbacks.
The big guns were jawboning early yesterday, with Robert Rubin saying he’s sees nothing but low inflation ahead (we like that), while President Clinton is going to pay off the national debt and balance everything, including your checkbook (we’ll see on that one). The bonds were up early and finished near their highs, up 25 ticks.
It doesn’t look like anything earth-shattering will happen at the FOMC meeting today and tomorrow. It will probably take a negative surprise from Greenspan to prevent some end-of-quarter (we’re at the half-year mark) window dressing in key institutional stocks. As always, we’ll focus on the out-performing, high-relative strength momentum stocks the institutions will continue to buy until the story changes or valuations get extreme. That, in addition to program buying and some hedge funds willing to accelerate the stocks in the direction they’re going, can lead to explosive moves.
One key point: Texas Instruments (TXN) yesterday gave an example of delayed entry, where a stock gaps above an entry point, then trades below it (in the case of a buy), reverses and trades again through the entry point, offering a chance to get in. Take a look at a five-minute chart. I’ll post this example on the site in the near future, along with a brief explanation on delayed and second entries, which are more common than straightforward, first-time-through entries.
Target Stocks Of The Day  Some strong institutional names that set up yesterday and look good today if we get carry-through are Solectron [SLR>SLR], Texas Instruments [TXN>TXN], Cisco [CSCO>CSCO], MCI Worldcom [WCOM>WCOM], Sun Microsystems [SUNW>SUNW] and Lucent [LU>LU]. These stocks are all sitting right at their highs. If the institutions come for them, they’ll gap them right out of there.
Also look for entry in one of our favorites, Go2Net [GNET>GNET], which has split, Network Solutions [NSOL>NSOL], Intuit [INTU>INTU] and BMC Software [BMCS>BMCS].
Program Trading Numbers | ||
Buy | Sell | Fair Value |
13.05 | 9.70 | 11.75 |
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.