Recycling Continues

October 31, 2000
Kevin Haggerty

Increased volume preceded
the move and you should view your historical quotes where you will see that in
(
IP |
Quote |
Chart |
News |
PowerRating)
for example, the increased volume from 9/19 and 9/20, again on 10/4, then huge
volume of 9.9 million on 10/18 as IP closed at 30.68, up from 26.81 the
preceding day. That was followed by another three days of good volume and
yesterday it closed at 36, up from 33 1/4 on 7.9 million. The papers were
recommended by a brokerage firm yesterday as strong buys as the analysts follow
the move up. They very rarely lead
it.

As this happens, more
momentum develops as many portfolio managers, afraid they might miss the train,
jump on board. The cyclicals are tough, and it usually is only the Generals that
are first in and first out that make a decent return. The move in the cyclicals
is covering most all of the basic sectors, so does that mean the Generals now
perceive a soft landing? As we have discussed before, they sold them down hard
and bought utilities anticipating a hard landing and for good reason. A soft
landing is extremely rare.Â

The financials did well
yesterday with good trade-through entry in all of our stocks except
(
FITB |
Quote |
Chart |
News |
PowerRating)
which will probably go today. The revaluation of the chosen ones continued
yesterday as the NDX 100 declined 3% but it did trade very geometrically. After
a gap down opening, we got a contra rally to a 3195 high as the professionals
unloaded their inventory after buying it at a discount from retail. Then the
Generals took over as the index sold down to 3038 by noon.

At the same time, the
semis, which bucked the technology trend yesterday finishing +2.5%, are trying
to complete 1-2-3 bottom patterns. Look at
(
TXN |
Quote |
Chart |
News |
PowerRating) and
(
MU |
Quote |
Chart |
News |
PowerRating) as examples, in
addition to the SOX. Take a look at recent volume in TXN and it is very evident
that some money was put to work on 10/18 and 10/19 as TXN hit a 35 low on 10/18
on 27.9 million shares, closing at 36 7/8, followed by 25.2 million the next
day, closing at 45 3/4.

TXN will accelerate above
51.5 and might run to the 200-day EMA and .50 retracement level from 60 to 62.5
and then to at least the .618 RT level of 69. The levels are from framing the
6/20 90 high and the 10/18 35 low. The semis have already experienced what
amounts to a 2-for-1 stock split and then some, just waiting to be recycled
again.

The recycling of the basics
is in progress, while the chosen ones have already had what amounts to 3-for-2
split declines and some might have to get to 2-for-1 before the recycle
propaganda starts from the analysts. The semis are just waiting for the first
call from an analyst with enough gumption to make an early call.Â

face=”arial, helvetica”>(December Futures)
Fair Value	size=2>Buy	size=2>Sell
10.80	12.05	9.60

Pattern
Setups

Have a good trading day.Â

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Recycling Continues

BUY THE FEAR, SELL THE GREED

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