Reduced Volume, Increased Volatility

August 29, 2000
Kevin Haggerty

On the
9:30 a.m. bar, the S&P futures
broke above the 20-, 60- and 260-EMAs on your five-minute chart, in addition to
the previous close. They trended up from a low of 1511 on that bar to a high of
1529.30 by the noon bar. From that intraday high, the afternoon downtrend took
the S&Ps back down to the 260-EMA of 1518, where they finished at 4:00 p.m.
The early enthusiasm turned into the afternoon blahs.

The Dow finished +60 points
for the sixth straight day on the plus side, as the report-card week got started
on the plus side. As I referred to in my August
23 commentary, last year the week before Labor Day was volatile. We can
expect the same thing again this year as the liquidity is very thin, which
creates the volatility that daytraders thrive on.

The S&P 500 has come
out of the upper boundary of the weekly symmetrical triangle on price, but
certainly not in any kind of volume. For daytrading, price is the game because
you will be flat at the end of the day, but if it also looks like a good
position trade, then you look for the volume confirmation.Â

We are 21 days into this
rally, and the pullback won’t start until you at least get a close below the low
of the high day and probably after the end of the month and the first few days
of September, as some money hopefully gets put to work.Â

In conjunction with a close
above the low of the high day, I am looking for a close above the high of the
low day for the VIX, which continued to move lower along its lower Bollinger
band. Also, you want to see a
reversal day first on the S&P 500 followed by a close below the low of that
day.

The brokers also had a
strong day and are acting as if there will never be another down day, or else
they will be taken over. Either way, it is a win-win for the daytrader as this
game is played out.

face=”arial, helvetica”>(September Futures)
Fair Value	size=2>Buy	size=2>Sell
4.80	6.00	3.60

Pattern
Setups

If they decide to take the semis
today, the SMHs above par should prove rewarding. Also
in the financial sector would be Citigroup
(
C |
Quote |
Chart |
News |
PowerRating).

Those of you who attended my June
seminar should receive a follow-up email this afternoon, but if not, please
email me (kevin@westnet.com) with your
correct email address,Â and I will send it out.

Have a good trading day.

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Reduced Volume, Increased Volatility

BUY THE FEAR, SELL THE GREED

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