Range-Bound
The S&P 500 is still locked in its 1305-1277 range. Yesterday the cyclicals couldn’t stand Tuesday’s prosperity and gave back some of their gains. Techs and energies reversed Tuesday’s action, finishing up on the day, and the Internets made an excellent trader’s move in the afternoon.
By the way, save your five-minute charts of AOL, AMZN, and YHOO for future reference. They made excellent cup-and-handle breakouts on patterns that formed between 11:00 AM and 2:00 PM ET.
Banks were awful, with the Bank index (BKX) making a new minor low below its 200-day moving average. The drugs also were weak, led by American Home Products (AHP). This tape is trading like the S&P 500 will at least trade down to its 200-day moving average of 1233 after first attempting an oversold rally, which it looks like it’s trying to do now, based on the last three days (the SPDRS have closed near the top of their range the last three days).
There are some setups, but we need the buyers to show up two days in a row. When trading gets erratic like this, you must keep scrolling your five-minute charts to identify dynamic situations that are starting to move, especially breakouts from long, tight consolidations to intraday highs. That’s when the urgency of the buyers becomes apparent (the situation is reversed, of course, if you’re on the short side).
Target Stocks Of The Day  Some volatile, high relative strength stocks that set up yesterday include Circuit City [CC>CC], Dillard’s [DDS>DDS], Tandy [TAN>TAN] and Tel Mex [TMX>TMX]. These are all narrow-range patterns.
Some continuation patterns that look good are Qualcomm [QCOM>QCOM], which pulled back from its highs and closed at the top of its range above its 10- and 50-day moving averages, Tellabs [TLAB>TLAB], Adobe [ADBE>ADBE], Jabil Circuit [JBL>JBL], Qwest Communications [QWST>QWST] and IBM [IBM>IBM].
Remember: Keep scrolling those five-minute charts during the day. I didn’t mention the futures or the fact that the bonds are up this morning, because I can’t listen to Greenspan talk any more. Just wait and see which way the stocks go–they change with every bit of news.
Program trading numbers  Buy: 4.25. Sell: 0.90. Fair Value: 2.35.
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.