Red Start

August 6, 2001
Kevin Haggerty

Friday
was light and down as NYSE
volume dropped off the table to 938 million from 1.2 billion the previous day.
This was about 80% of its average volume, while the Nasdaq was even lighter,
trading only 70% of its average volume at 1.2 billion. Both volume ratios were
weak, at 45 for the NYSE and 31 for the Nasdaq. All of the major market indexes
finished red, with the
(
SPX |
Quote |
Chart |
News |
PowerRating) -0.5%,
(
NDX |
Quote |
Chart |
News |
PowerRating) 100 -1.5%, and the Dow -0.4%. The
(
SOX |
Quote |
Chart |
News |
PowerRating)
led the NDX decline, finishing -2.4% and closed below the low of the previous
day. On Thursday, the SOX bumped up against its 200-day EMA of 661, hitting a
high of 657.37. The highest probability is more pullback in the Semis, and you
want to take advantage of any intraday short setups.Â

For the NDX, Friday’s low
of 1719 becomes your early downside pivot, and below 1707, then 1704, puts the
NDX in minus territory again below all of its EMAs. On the upside, the
swing-point high is 1767, preceded by the 50-day EMA of 1743. The SPX closed at
1214.35, with the 50-day EMA right above at 1219 and double swing point
resistance at the 1225 level. The NDX is not at any key alert zone in price or
time, so there is nothing to do but wait for the train to leave and then get on
board. That’s the primary luxury of the short-term trader. Let the Generals make
the decision. The price/volume activity isn’t all that bad, with the pullbacks
on light volume and more advancing volume on the up moves. If this doesn’t
change, the possibility of an upside surprise is very good.Â

The media earnings circus
is winding down, and the next circus for the empty suits will be the expected
decline in productivity, which they will hype whichever way the number comes
out. The number comes out Tuesday, then there is also Cisco’s
(
CSCO |
Quote |
Chart |
News |
PowerRating)
earnings.

(September
Futures)

Fair Value

Buy

Sell

3.75

4.90

2.55

Stocks
Today

The good news is that the
Semis came to life in price and volume. The Semis should lead any sustained
market move from here. The bad news is that including the initial rally off the
April lows, the SOX has challenged and failed at the declining 200-day EMA five
times. It closed at 641 on Friday vs. its 661 200-day EMA, so the upside
continuation pivot is obvious, while the 20-day EMA is down at 606, and the
50-day EMA is 605. Make no mistake. The Generals put some volume into this Semi
move, so any pullback must be watched closely for opportunity and also as a key
market barometer if we are to get a rally into the late-September key alert time
zone. Until shown otherwise, the
short side for intraday traders is to be taken advantage of in this group.

Have a good trading day.

Five-minute chart of
Friday’s SPX with 8-, 20-,
60- and 260-period
EMAs

Five-minute chart of
Friday’s NYSE TICKS

Do you have a
follow-up question about something in this column or other questions about
trading stocks, futures, options or funds? Let our expert contributors provide
answers in the TradingMarkets Trading Advisor! E-mail your question to questions@tradingmarkets.com.
For the latest answers to subscriber questions, check out the Q&A section,
linked at the bottom-right section of the TradingMarkets.com home page.

Red Start

BUY THE FEAR, SELL THE GREED

Quick Links

Company Info

Contact

Company Resources