Monday, Monday

December 10, 2001
Kevin Haggerty

On
Thursday, the major indices rolled over some, as
the SPX
(
$SPX.X |
Quote |
Chart |
News |
PowerRating) hit the 1174 .618 retracement level and the 200-day SMA,
also at 1174 on both Wednesday and Thursday. This resistance sent the SPX down
to the 1152.66 intraday low on Friday, which was a steady downtrend day without
the normal two-way volatility daytraders thrive on.

The SPX closed at
1158.31, right on the high end of that 1150-1160 confluence of resistance. On
the five-minute charts it gets going again to the upside above 1159.11. With the
early red I see at 7:45 this morning, that probably won’t be the initial
sequence. Going into the 1174 level, there was a negative divergence in RSI for
all three of the major indices, but the RSI is still above 50 for all three, and
not even the shortest trendline has turned negative yet, so the rally is still
intact until shown otherwise.

The
(
DIA |
Quote |
Chart |
News |
PowerRating)s are in a
good pivot position for longs or shorts. They closed at 100.49 with the 200-day
SMA at 101.32, and the 200-day EMA at 100.29. The .618 retracement to the May
high is 100.60. Thursday’s high was 101.61, with the high rally close coming on
Wednesday at 101.14. Support at the top of the recent base is at the 100 level.
With that clear of a picture, you just follow the dots and take any intraday
setup involving the pivot points.

On the overall market,
the higher probability is that the September “V” bottom will have a
retest regardless of whether the Generals and government can maintain the price persistence
in the major indices through year-end with only the shallowest of backpedaling.
The retest could come after the initial new monies get put into the market in
early January and then generated a February downturn similar to last year. If
the economy is really picking up according to the exaggerated price rises we
have seen in many stocks with nothing but verbal or pro forma nonsense regarding
earnings with no substance, then your old friend Greenspan could easily be
raising rates in the first quarter of 2002.

Stocks
Today

Have a good trading day.

Five-minute chart of
Friday’s SPX with 8-, 20-,
60- and 260-period
EMAs

Five-minute chart of
Friday’s NYSE TICKS

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