Mini-Panic
If the institutions had reacted like the bonds and S&P futures did to Robert Rubin’s well-forecasted resignation, the Dow might have dropped 600 points instead of 200 yesterday.
The S&P futures sold off more than 30 points to a low of 1329; it would be interesting to see the volume they dropped on–probably not much. This waterfall triggered sell programs, accelerating the move. But after closely watching the volume after the programs took hold, it was easy to see there was no panic coming from the institutions. There were a lot of multiple down ticks, the ticks went off well over 1000, and lots of small trades–basically, the specialists stepped aside, taking the minimum number of shares, and the institutions did the same, scaling down and letting the programs have the market.
After that, the NDX and bonds were up for the rest of the day. The techs put in quite a performance. And even though the Dow ended up down on the day, it made it into positive territory at one point. Volume was only 833 million shares.
A little-discussed topic is how fragile the S&P futures liquidity really is in difficult situations. That’s why the Fed’s trading desk, and whatever group of large players they have put together, might have to step in a crisis situation (this has probably happened more recently than you think).
Target Stocks Of The Day  Keeping in mind the QQQs (NASDAQ 100) are up 9% in six days vs. about 3.8% in the Dow, here are some stocks that have re-crossed and closed above their 50-day moving averages: Alltel [AT>AT], Applied Materials [AMAT>AMAT], and Best Buy [BBY>BBY]
Other continuation patterns that look good are Citigroup [C>C], Staples [SPLS>SPLS], Providian Financial [PVN>PVN], and Schwab [SCH>SCH], which has had a good move the last two days. If you get entry in Schwab above yesterday’s high, keep a tight stop; this is a stock that can run.
Program trading numbers  Buy: 7.40. Sell: 3.00. Fair Value: 5.10.
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.