Momentum Players Marking Up OTC Techs
Friday was the usual Day After Thanksgiving, with just over 300 million shares trading and institutional blocks of 10,000 shares just 6,073. The momentum players are having the times of their lives, marking up many of the high-priced OTC tech stocks to bolster their performance. As that performance climbs vs. the S&P 500, it makes the closet indexers get antsy and want to join the party, and you get more advance. It makes it easy for traders to select trades on a daily basis. It was a quick downdraft in the S&Ps late in the session to wipe out the earlier gains. The Diamonds and Spyders both finished in the bottom of their daily ranges, setting up possible short entries Monday. The market internals continue very weak, which should overcome the mark-up of key stocks in the major averages. With year-end sneaking up very fast, it doesn’t look as if we will get more than a 38% retracement of this rally, if that. That would take us down to the 1350-1355 level, which is the 50-day exponential moving average (you’ve saved your reference points that we put out the other day). The surprise will be that we break out of the current eight-bar consolidation to new highs, trap the shorts, then start a retracement to set the plate for the final year-end run to give the institutions their 20%-plus returns for the S&P 500. Remember, you can’t quantify opinion — price is everything. Whether they buy them or sell them Monday, it shouldn’t matter. Get on board in the direction that they’re moving. Early on, they’re running the usual Internet culprits. Amazon [AMZN>AMZN] and Yahoo! [YHOO>YHOO] are both up well over 3 points and CMGI [CMGI>CMGI] is up 2 3/4. The S&Ps have now recovered and are now up over 3 points. Pattern Setups On the short side, as we mentioned above, Diamonds and Spyders. Watch for entry below Friday’s lows, and second entry will be best. On the long side, there are some carryovers from Friday that still set up because of the quiet activity. Biogen [BGEN>BGEN], Comverse [CMVT>CMVT], America Online [AOL>AOL] above 85 1/4, Lycos [LCOS>LCOS], ISS Group [ISSX>ISSX], and Merck [MRK>MRK]. If they want to take EMC [EMC>EMC] to new highs, get on board. Also in the retail sector, following in Tandy’s [TAN>TAN] footsteps, look for entry in Wal-Mart [WMT>WMT], Home Depot [HD>HD], Best Buy [BBY>BBY], and Circuit City[CC>CC]. I’m sure one or two of those four stocks will give you trade-to-entry Monday. Program Trading NumbersBuySellFair Value5.503.304.40 Have a good trading day.