Recognize It

February 15, 2001
Kevin Haggerty

The
Generals showed up in time to
liftÂ the Nasdaq 100
(
NDX |
Quote |
Chart |
News |
PowerRating) from the hole and it was sorely needed. While
the NDX traded down to a 2173 intraday low, the Semis and some of the Chosen
Ones remained green, showing exceptional relative strength. The NDX rallied to
2251 (or 1.27 times the 2233-2173 leg), then retraced 50% to 2208. Then the
strong afternoon trend took it to 2307, a 6.2% run low to high, and a +4.4% move
on the day.

The Semis, especially the
equipment sector, led the way, as all the stock from my Monday
and Tuesday
commentary had significant moves on increased volume and expansion of range. As
mentioned the other day, the Semis had run up from 72 to 125% as a group from
the recent bottom, then retraced from one half to two-thirds of that move, with
stocks like
(
NVLS |
Quote |
Chart |
News |
PowerRating) retracing 50% and converging with the 50-day EMA and the
top of its base breakout at 36.

The Generals were clearly
on a mission in the Semis because the market dynamics were showing you declining
volume 2 to 1 over advancing volume and approximately 600 decliners over
advancers, with both the SPX and Dow red, yet the Semis were green, along
with some of the chosen ones. That
only happens when the Generals are in competition to buy stock.Â

When there is that kind of
competition between the Generals, you get the explosive Slim Jims and
first-consolidation breakouts to new intraday highs. No
guesswork involved, just following the money. You have the Semi
list I gave you, so just work it for setups both daily and intraday. When
the Generals have enough stock in and stop feeding at the trough, the stocks
pull back and hopefully set up again. Your job is to recognize it — not predict
it. Suffice to say, the enthusiasm
must spread before the major averages give your 401K mutual fund holdings any
boost.

Those of you who attended
my New York seminar got a VRSN confirmed buy pattern entry yesterday because
even though the 200-day EMA slope is down, the stock is more than the required
percentage below it.

(March
Futures)

Fair Value

Buy

Sell

5.15

6.35Â

Â 3.80Â

Pattern
Setups

Have a good trading day.

Recognize It

BUY THE FEAR, SELL THE GREED

Quick Links

Company Info

Contact

Company Resources