Maybe You’re Focused On The Fed Today, But I’m Focused On These Ideas

• June 25, 2003
• Kevin Haggerty

What Tuesday’s Market Action Tells You

Yesterday’s
market action told you nothing more than maybe the Generals will hold price and
not let anything much happen on the downside until the second quarter is history
and on the books. Into yesterday’s close of 983.45, the SPX
(
$SPX.X |
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+15.9% for the second quarter to date, while the first quarter of 2003 was -3.7%
going from the 2002 year-end close of 879.39 to closing at 848.18 on March 31.
That makes a net six-month gain to date of +12.2%. That’s been a long time
coming, and the mutual fund industry desperately wants as positive a six-month
track record that they can get. Of course, the vast majority of general funds
don’t beat the SPX bogey, but that’s for another commentary. 

It was a narrow-range day yesterday for the major
indices, with the SPX trading in only an 8.76 point range between a 987.84
intraday high and 979.08 low. The pivot action around the 20-day EMA, now
981.96, did provide opportunity. It ran to 987.21 by 10:00 a.m. ET, then
declined to 979.08 by the 10:50 a.m. bar, then re-crossed the 20-day EMA to the
upside again, trading to an intraday 987.84 high, closing at 983.45, just +0.2%
on the day. The Dow
(
$INDU |
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(
$COMPQ |
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the
(
QQQ |
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day.

NYSE volume was 1.37 billion, volume ratio
neutral at 54, as was breadth at +187. In the betting world, they’d say it was a
push, then again, isn’t the market just a casino with a different name?

Nothing significant occurred in the major
sectors, but the brokers, which is the XBD, did lead at +1.5%, and
(
LEH |
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(
GS |
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(
MWD |
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(
MER |
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(
SMH |
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finished -1.4%, closing at 27.84. A bounce off a 27.50 intraday low, running
+2.4% to an intraday high of 28.15 before closing at 27.84. You were ready in
that zone for any move. There was a good 1,2,3 higher bottom entry on that
trade.

The earnings volatility will pick up steam in
July, and I see now that the SARS epidemic is to blame, just as they used 9/11
as a crutch. The media is all over the Fed rate cut, which essentially means
nothing in the way of news, and the media is also so desperate for hype they are
telling you how the outcome of the Martha Stewart case will affect the market,
which ranks at the top of media and market absurdity. 

Today’s Plan Of Attack

For
today, many of the focus stocks are still set up after yesterday’s action.
(
APOL |
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PowerRating) gave you a good trade-through move yesterday from 61.07 to a 63.66
intraday high, or +4.3%. If you just trade the E-minis, you miss a world of
opportunity.
(
MXIM |
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setup.
(
AMGN |
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(
GENZ |
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(
GILD |
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(
APOL |
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PowerRating),
(
MERQ |
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(
PCAR |
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If the Generals decide to take cyclicals today,
look to
(
DOW |
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(
BCC |
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was +1.0% on 37% more than its average volume, and BCC was +1.35 on a 67% volume
increase. 

In the semis, because of the level, the SMH
remains the primary focus. 

Be ready to play
(
EBAY |
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it to new highs. 

Other stocks on today’s trading list are
(
SIAL |
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(
IVGN |
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(
TEVA |
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(
TARO |
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(
ERTS |
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(
LTR |
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(
HRB |
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(
CBE |
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(
PAYX |
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(
STJ |
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PowerRating). 

I look for all of these trading ideas using the
S&P 500, NDX 100, 3-Day Wake Up Call, and Change in Direction screens, all
of which are on my TradingMarkets commentary page. 

Have a good trading day.

Kevin Haggerty