Red March

Very few stocks were missed in yesterday’s sell-off–they do get everybody when they want to. All 30 Dow stocks finished in the red and only 35 of the S&P 500 closed up on the day.

Only two out of 35 of our tech friends on the Morgan Stanley high-tech index (MSH) finished on the plus side, and only one of the fifteen stocks in the drug index closed positive. Even the Gold & Silver index (XAU) and the Energy index (XOI) finished down–unusual in light of current events.

The Dow made history last Wednesday when it crossed 10,000, but it has dropped 4.8% from it’s Friday high of 10159. At the same time the S&P has retreated 4.7%, leaving it up only 2.7% on the year.

The stage is being set for a good end-of-quarter mark-up in the institutional favorites. The S&P 500 has fallen to just above its 50-day exponential moving average of 1254.68. If continuation of yesterday’s down move takes the market below that level, look to enter on an upside re-cross (with a tight stop just below the moving average level).

By doing so, you’ll catch the mark-up (that only dire events will cancel). The SPDRs (SPY) are a good vehicle for this kind of trade because you don’t have to deal with high option implied volatility.

Target Stocks Of The Day Strong relative strength stocks that have pulled back to their 50-day exponential moving averages and should be monitored for intraday buy patterns include General Motors [GM>GM], Wal Mart [WMT>WMT], McDonalds [MCD>MCD], Medimmune [MEDI>MEDI], Cisco [CSCO>CSCO], Guidant [GDT>GDT], and Maxim [MXIM>MXIM].

I’ve mentioned in previous commentaries about the trade opportunities in hard-to-borrow stocks. Watch the following issues on a daily basis and look for any positive buy patterns: Ameritrade [AMTD>AMTD] Go2Net [GNET>GNET], Global Telesystems [GTSG>GTSG], Netgravity [NETG>NETG], and [BXM>BXM] Biomatrix. Many of you probably are familiar with these are stocks from our Proprietary Momentum and “Where The Action Is” lists. They continue to be hard to borrow, and any upside movement will be exaggerated.

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.