Rising Prices, Declining Volume

• February 26, 2002
• Kevin Haggerty

The
bullish semiconductor analyst counter-attack
got the
(
$SOX.X |
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intraday high of 43.29. The SMHs have been trading in a box for three and a half
months between 47.74 high close and 40.72 low close. It closed below 40.72 on
Thursday and Friday, but with the bullish analyst out of his hole yesterday, the
SMHs went back to the equilibrium point of the box. The downside projection from
the box would be about 34.

The .618 retracement to
the September low is 35.39. Yesterday’s intraday high was right at the 50-day
EMA of 43.32. The 20-day EMA converges with the 50 and is 43.27. The semi battle
between analysts has become interesting. Let’s hope the bulls win, but I think
the semis want to work lower. There is no uncertainty where the pivot points are
in the box up or down, so we can just watch and wait for it to resolve itself
before we act.

NYSE volume was 1.3
million, volume ratio excellent at 73 and breadth positive at +740. The OSX
tacked on another green day at +3.3% as
(
SLB |
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(
BJS |
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surge while the banks and brokers reflexed back up at +2.7% and 2.3%. I am sure
you noticed that both afternoon surges on Friday and yesterday started on the
2:30 p.m. bar for the SPX
(
$SPX.X |
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PowerRating). The
program gang is consistent.

The DJX
(
$DJX.X |
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led by the basics, which are following the leading indicators and other recent
favorable economic chatter, is now above its 10-week, 30-week and 12-month EMAs
where the NDX 
(
$NDX.X |
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the SPX is -2.4% below its 30-week of 1135.82. As you know, rising prices and
declining volume in a rally isn’t what you want, especially when you are looking
for a reversal. That is what I see as the SPYs went from a 109.64 close to a
111.45 close yesterday and volume declined from 27 million to 17 million. 

The QQQs jumped from a
33.65 close to 35.01 as volume declined from 100 million to 89 million. The DIAs
with all the noise in the smokestack stocks have gone from a 98.38 close on
Thursday to 99.98 on Friday. Volume declined from 10.8 million to 8.2 million.
Yesterday the move from 99.98 to 101.61 was on 8.9 million, just a slight
increase in volume from Friday. 

Reading the hype and
following price and volume should go hand in hand before making any position
decisions longer than a daytrade. Going
into today, we have the end of the month and end of first few days of March for
new monies, so this should give us a little bit more room on this rally. 

Stocks
Today

Daily chart long setups:
(
BRKS |
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(
NVDA |
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(
BNI |
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(
WHR |
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(
PHM |
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(
HD |
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(
BA |
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(
APD |
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(
CYMI |
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(
IDPH |
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PowerRating).

Have a good trading
day. 

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

Five-minute chart of
yesterday’s NYSE TICKS