Market Flashes Early Green Light

Market Flashes Early Green Light  Yesterday was a choppy day with lots of futures-related asset allocation. The SPDRs crossed their opening price of 132 3/16 eight times during the day–the most I’ve seen in months. They made a new intraday high of 132 7/8 around 1:30 p.m. ET, and then sold straight down to an intraday low of 131 1/4 around 3:30 p.m. before finally closing at 132.

The techs did okay, led by LSI, Ascend Communications, Sun Microsystems, and Dell. The bottom line here was the divergence between the Nasdaq, which was up because of the tech stocks, and the S&P 500, which dropped on the day.

There were a lot of mixed moves, with the bonds moving up almost a point, program trading, re-investment and other institutional activity, making it a very difficult market to operate in. On balance, yesterday was a non-directional, divergent day, controlled by the futures, not the institutions.

Target Stocks Of The Day  Although some of the stocks I’m looking at today are off the beaten path, they’re still high relative strength momentum issues. The following are some pullback patterns near highs: Colgate [CL>CL], Go2Net [GNET>GNET], TJX [TJX>TJX], PSINet [PSIX>PSIX], Biogen [BGEN>BGEN], Time Warner [TWX>TWX], and Boston Scientific [BSX>BSX]. They’re all strong momentum stocks–if you get continuation entry, they should go.

For bottom fishers, these are some stocks that moved up yesterday on good institutional volume: Computer Sciences [CSC>CSC] and National Semiconductor [NSM>NSM]. The chip stocks are doing well this morning, and with the futures up early and the other Nasdaq generals showing a green light, it looks like there could be another gap opening.

The medical products group stood out yesterday with increasing price and volume. All three institutional stocks in the group–Bausch & Lomb [BOL>BOL], Medtronic [MDT>MDT], and Guidant [GDT>GDT]–were bought yesterday, so look for follow-through in these issues today.

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.