Morning Victory

  • August 30, 2002
  • Kevin Haggerty

Both
the SPX
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the Nasdaq
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other hand, the Dow transports took a hit at -2.9%, the Dow Jones utilities were
-1.4%. In a word, the indices were all over the board. NYSE volume was 1.2
billion, about 15% below average, the volume ratio neutral at 51, and breadth
+448.

In itself, the final
scorecard tells us nothing, certainly not the excellent chop the daytraders were
able to take out of the major indices and the semis in the morning after the
futures-induced selling on the opening. That overreaction immediately set up
Trap Doors in the major indices, along with the semis, which were our immediate
focus because of the oversold condition.

For example, there was a
Trap Door entry on the SPX with entry above 906.61 and then a pullback flag
entry above 913.40. This trade ran to 924.59 before a .618 retracement to the
912 level, then a reflex back to 922.20, closing almost unchanged on the
day. 

The semis also gave us a
nice pop in the morning, and hopefully you were ready to jump on the oversold
reflex with the SOX having been down 17% over five days and 10% for the previous
two days. The
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bar setup with entry above 23.86 which ran to 24.90 before fading to close at
24.50.

If you played individual
semis, there was an excellent Trap Door entry for
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ran to 34.03. Your choice was the initial 1,2,3 entry above 32.41 and the second
entry was obvious, which was the consolidation breakout above 32.60.
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gave you a defined Dynamite Triangle entry above 16.69 and then a consolidation
breakout above 16.74. It ran over 4.0% to 17.40 before the afternoon fade. At
day’s end, the SOX was virtually unchanged at 304.33 vs. the previous close of
303.80. But that is after the fact, as daytraders once again capitalized on the
“Game”.

Today is end-of-month and
also a travel day for most. Specialists and market makers will be thin, so the
“beachball effect” for the major indices is in effect, and it just
depends on which gang wants to push it around. 

My next commentary will
be Wednesday. 

Have a good trading day,
and have a great holiday weekend.

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

Five-minute chart of
Thursday’s NYSE TICKS