Report Card And FOMC

June 27, 2001
Kevin Haggerty

size=2>The expected gap down openings in the major indexes gave
you some excellent Trap Door and Volatility Band trades as the contra rally
started on the second bar for the Nasdaq 100
(
NDX |
Quote |
Chart |
News |
PowerRating) and the fifth bar for the
S&P 500
(
SPX |
Quote |
Chart |
News |
PowerRating). The NDX which opened down 2% hit the emotional low at
1706 and ran to 1736 in six bars for a good daytraders contra move. From there,
the index dropped down to a Double Bottom at 1706 just before noon ET and then
the buy programs took over, as the NDX rallied to a 1751.62 close.

As you should know, Friday
is the last day of the month and the six month report card for the Generals is
very important. I don’t think I have to mention the guy from the Fed who is
still trying to right the ship he sank. There will be many who might short into
any Fed celebration, but few want the mark to the market being short
going into the meeting.

The SPX hit 1206 on the
opening move down, had a 7 point contra rally, then slid back down to 1204.64
(intraday low) before the afternoon program explosion carried it to 1221
(intraday high), closing at 1216.76. The first test of the 1203 low from 6/15
held — for now. If the SPX trades below that 1203 low, the 1170 or 1180 .618
retracement level becomes an easy target.Â Nothing
exciting can begin to happen on the upside until we clear the recent minor high
at 1240, which is also right at the 50-day EMA. The SPX runs into the box of
resistance which starts at the breakdown point of 1246. The 100-day EMA is right
above at 1255.Â

The NDX, which closed at
1251.72, is knocking at the 1768 head-and-shoulder neckline and breakdown point
with the 50-day EMA at 1825. We all know where the 1655 recent low is, which, if
broken, makes 1626-1504 an easy target. Going
into the Fed show today, you will be just scrolling those charts for scalps,
then flat into the meeting, and then react to any over-emotion. CNBC has 2:15
p.m. at the same hype level as the Super Bowl or Kentucky Derby.

There were many intraday
opportunities in the various stocks yesterday if you were scrolling. Most often,
you will get multiple chances in the same stock. For example,
(
CIEN |
Quote |
Chart |
News |
PowerRating) was on
my commentary as a daily chart setup with entry set for below the Tuesday 39.73
low. We knew that wouldn’t happen — as we expected the market to gap down on
the opening. It did — and so did CIEN which opened at 39.32 vs. the previous
40.38 close.

The first trade was a Trap
Door Dynamite Triangle pattern with three inside bars that ran to a 40.30 scalp.
The second trade was a trade-through short going below 39.73 which was the
original daily chart setup and then a continuation short below the first
intraday low of 39. The next compelling trade entry was when CIEN reversed the
39 low, running back to a new intraday high of 40.60. There were probably some
who took entry as CIEN started to move out of its consolidation above the 37.83
intraday lowÂ — I just pointed out the clearly defined entry patterns that
repeat, day after day.

face=”arial, helvetica”>(September Futures)
Fair Value	size=2>Buy	size=2>Sell
7.65	size=2>Â 8.80 Â	Â 6.25Â Â

Stocks
Today

Good luck on your reactions
to Mr. Greenspan and I hope to see most of you on the TradersWire Interactive
today — it’s been a lot of fun so far.

Have a good trading
day.

border=0>

Tuescolor=#0000ff>day’s S&P 500 five-minute chart with color=#008000>8-, 20-,
60- and 260-color=#0000ff>period EMAs

Tuesday’s
NYSE TICK five-minute chart

Report Card And FOMC

BUY THE FEAR, SELL THE GREED

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