My Bias Remains Up

• March 26, 2002
• Kevin Haggerty

Yesterday
was the lightest full-day volume of the year at
1.05 billion, a volume ratio of 19, and breadth very negative at -1270. No
Generals showed up after the early up, and the result was a persistent price
decline by the major indices. The Dow
(
$INDU |
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PowerRating) was -1.4%, the SPX
(
$SPX.X |
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PowerRating) -1.5%, and the NDX
(
$NDX.X |
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PowerRating) -2.9%. You were stopped out
on the indices after the early three-bar up and then an opening reversal that
broke below the previous day’s closing range and below the eight-period moving
average of the high and the eight-period moving average of the low, in addition
to the 20-period EMA, all on your five-minute chart. If you took the short, good
for you. My bias still remains up
through quarter’s end and the first four to five days of April and will take any
intraday long in the proxies as they set up.

In the sectors, the
(
$BTK.X |
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(
$SOX.X |
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run with the
(
$XAU.X |
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PowerRating) at +3.3%. Someone told me the rag sheet on TV said
yesterday that 78% of the Mondays prior to Good Friday have been up. The market
caught the short end of the probability yesterday, but it does highlight a key
point. After yesterday’s decline,
the
(
QQQ |
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PowerRating)s, which closed at 35.56, are right in the .618 retracement zone of
35.00-35.42.

The SPX closed at 1131.87
with some breakout level minor support at 1125, which is also the .50
retracement to the Feb. 20 1074.36 low. The nearest upside reference is the
50-day EMA at 1136.14. This gives you a framework as the day unfolds on the
intraday charts. Also, the SPX has that overhead resistance between 1142-1138
where it traded sideways yesterday from 11:00 a.m. to 3:00 p.m. before the
program gang attacked a light-volume market at 3:00 p.m. 

Until late in the day,
(
KLAC |
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PowerRating),
(
AMAT |
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PowerRating) and
(
NVLS |
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basis, and in fact, were green all day until near day’s end. They will be front
and center today for intraday setups. Stay away from the dogs in the NDX that
the Generals are leaning on into quarter’s end.

Stocks
Today

There are certainly not
many buying pressure setups in the daily charts, but the few that I saw are
(
FDC |
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(
THC |
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(
NUE |
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(
GD |
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PowerRating).

In the semis, as I
mentioned previously, I’m going to focus on
(
KLAC |
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PowerRating),
(
AMAT |
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PowerRating) and
(
NVLS |
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News |
PowerRating).

On the shortside if we
turn red, in addition to the proxies, you have
(
EMLX |
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PowerRating),
(
SEBL |
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PowerRating) and
(
NVDA |
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PowerRating).

Also, I didn’t mention
prior to this, but the
(
DIA |
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PowerRating)s closed at 103 vs. its 50-day moving average of
102.17, which is also back to the support level from where the Dow made new
highs for this rally, so I’ll keep an early watch on that if we go soft
red. 

The oil service stocks
have pulled back some, and I will focus on
(
SLB |
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PowerRating), which is back to its base
breakout area, and also
(
GE |
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PowerRating) and
(
INTC |
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PowerRating), for any early intraday setups.

Like yesterday, the
futures are green early, but we have been there and done that, so let the first
two or three bars play out before you get in the game today.

Have a good trading day.

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

Five-minute chart of
Monday’s NYSE TICKS