Market Agenda

Yesterday was an unusual but rewarding day. The S&P 500 and the Dow both made record high closes, with seven stocks, led by AT&T, Citigroup, and J.P. Morgan, accounting for 108 points of the Dow rally.

The S&P hit its intraday high by 10:30 a.m. ET, and its low by 11:30 a.m. The day started out looking like a straightforward up trend day, but then the asset allocaters took over. The Dow dropped about 70 points from 10:45 to 11:05, while the bonds went from down one tick to up seven. The S&P futures dropped like a knife on two or three wide-range bars as the bonds rallied. I mention this only to remind you that it’s great when this kind of action goes your way, but it can be painful if you’re not prepared with your stops.

The techs reversed a bit, but some of the generals, like Cisco, EMC, IBM, and Intel, had good days. One note: When you see the excessive program trading and profit taking we’ve had recently, it usually means the current directional move is very close to ending. Intraday trends are now being met by unusual market behavior–there appears to be some very different agendas operating at the same time. However, with the new high closes and excessive OEX put buying, the averages probably will be pushed even higher before a correctional move begins.

The generals are looking green again today. Yahoo is rallying strong on yesterday’s earnings announcement, which should attract a lot of attention. The techs look like they could attract some participation and reverse yesterday’s move.

Target Stocks Of The Day  Some of the stocks I’m looking at have had a lot of wide-range days. If you get entry, terrific. If they gap and you don’t get entry, wait for the pullbacks. The following are a few interesting pullbacks from their highs: Intuit [INTU>INTU], Proctor & Gamble [PG>PG], and Wal Mart [WMT>WMT] and Merrill Lynch [MER>MER], which look like they’re getting ready for par.

If you’ve noticed, stocks that hit par can take off as much as 10-15% percent in two or three days (AOL, SCH, etc.). So if Wal Mart and Merrill crack 100, look for the fast run. Even if you don’t get initial entry above the previous close, watch for any pullbacks or bids building up–stay with these stocks.

Also keep an eye on Sprint [FON>FON], IBM [IBM>IBM], which reversed and closed at the top of its range yesterday, Carnival [CCL>CCL], Chase Manhattan Bank [CMB>CMB], and Bank America [BAC>BAC].

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.