Looking UpÂ Â Until the S&P 500 closes below the low of the high day, which
right now is last Thursday, March 11 (with a high of 1306.41 and a low of 1286.83), the direction
The market hasn’t even traded below the prior day’s low in seven days. The best trades are
still in the S&P big-caps with price momentum and rising volume. Elephants (institutions) can’t
hide; this is where you’ll find the most explosive trades.
I recently received an e-mail asking, “Which is more important, the pattern or the market
dynamics?” My response–without hesitation–is that the stock and market dynamics are most
important. If both pattern and dynamics are combined, it will give you a higher-probability
trade. If I’m watching the monitor and see bids start to build in a certain stock or group, and
the trades are taking place at the midpoint or ask side of the spread, volume is increasing,
price is advancing, and blocks (10,000 shares or more) are going across the tape, that means
the elephants are involved, and I want to get in on the momentum.
If the market dynamics (up/down volume, action in the futures, etc.) also are in synch with
the action in the stock, get on board, because
you can now see which direction the train is moving–you’re not just guessing.
Target Stocks Of The DayÂ Â Consolidations at highs in momentum stocks include
Bed Bath & Beyond [BBBY>BBBY], MCI Worldcom
[WCOM>WCOM], Pfizer [PFE>PFE], Merck [MRK>MRK], and
Best Buy [BBY>BBY].
If you get entry, continuation patterns include Clorox [CLX>CLX], Texas Instruments [TXN>TXN],
and General Motors [GM>GM] (going through 90). After a strong initial move, Schlumberger
[SLB>SLB] has pulled back to just above its 200-day moving average and offers a good entry point.
Monsanto [MTC>MTC] also is being accumulated; it has clear sailing if it breaks out of the
50-44 box. Barrick Gold [ABX>ABX] had big block volume all day on Friday, trading at its
mid-point and ask;
someone is accumulating this stock.
Finally, America Online [AOL>AOL] and Wal Mart [WMT>WMT] continue to par. Option expiration anyone?
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.