Nervous Tape

Institutional participation was noticeably absent yesterday in a light volume, negative breadth day. The S&P 500 closed below the low of its high day (1323.75) and traded in a very narrow range: 1303.84 to 1294.18, with a close at 1297.

Only three Dow stocks trade more than 50% of their 50-day average volume, and many stocks that did have up days still had low volume. It remains a very skittish tape, with traders and investors overreacting to the slightest bit of news–whether they understand it or not.

Some of the high relative strength/momentum stocks gave excellent patterns yesterday. But be disciplined on your entry (if you get it), and maintain tight stops.

Target Stocks Of The Day  Patterns at or near highs that could be explosive include Amgen [AMGN>AMGN], Jabil Circuit [JBL>JBL], Sun Microsystems [SUNW>SUNW], ADC Telecommunications [ADCT>ADCT], Georgia-Pacific [GP>GP], Gillette [G>G], American International Group [AIG>AIG], and Allergan [AGN>AGN].

Pullback patterns in stocks finishing at the top of their ranges include Kohl’s [KSS>KSS], Citigroup [C>C], and Anheuser Busch [BUD>BUD]

Key Point: You’ll get better entry of you let your stock trade–not gap–through your level. That way you can see the dynamics of the stock: trading at the mid-point or ask side of the bid-ask spread, volume increasing, and positive market dynamics as you enter the trade.

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.