Seasonal Opener

October 20, 2000
Kevin Haggerty

There was a positive
divergence Wednesday as the Nasdaq 100
(
NDX |
Quote |
Chart |
News |
PowerRating) finished +0.3% as the S&P
500 ended -0.6% and the Dow -1.1%. The Nasdaq explosion yesterday was stronger
than Friday’s as up volume to down volume was 5.2 to 1 vs. 4.2 to 1 on Friday
the 13th. The Composite closed above the previous nine closes and eight highs
for a decisive change-in-direction day. The good news is that the NDX finished +8.4% on the day and the bad news is that it opened up 5.7% as the professionals
once again priced the emotion premium very rich.Â

The best money was made on
the short side as the volatility reverted to the mean. There were some excellent
contra moves after the gapped open before the upside stampede continued. Two
examples are
(
NEWP |
Quote |
Chart |
News |
PowerRating) and
(
JNPR |
Quote |
Chart |
News |
PowerRating). NEWP opened at 149 as of 9:30 a.m., up
from the previous close of 130.31. The 95% standard deviation band was 148.45.
The stock traded down to 136.33 before closing at 145.5. I hope you caught
either side of that.Â

JNPR closed Wednesday at
213 7/8 and opened yesterday at 229.5, right on the 1.5 standard deviation band
of 229 and immediately traded down to 220. The ensuing rally took it up to
234.31 and the 2.0 standard deviation band was 234. It immediately sold down to
227.14 before mounting the next rally which, by coincidence, took it back up to
234 where it faded to a 232.58 close.

The best and most precision
trade of the day was fading the open because of the airpockets that formed as
the openings were jacked up to extremes. The S&P 500 got there in a hurry
also, closing above the high of the low day at 1388.80 or +3.5% and above the
last swingpoint high of 1381. That makes the range of the past two days 84
points — from a 1307 low to a 1390 high — so you are now ready for pullback
setups in any retracement of the two wide-range bars or take continuation if we
get it. Careful on any first continuation entries.Â

The S&P 500 reversed
six closes and six highs. Until proven otherwise, the seasonal game is on.

face=”arial, helvetica”>(December Futures)
Fair Value	size=2>Buy	size=2>Sell
12.40	13.80	11.20

Pattern
Setups

The S&P 500 and
NDX 100 stock
screens are up now on the site under Indicators. You now have what I look at
every morning. I will follow up on Monday with a thought process of using the
screens.Â

One stock that’s been knocked all the
way down for bottom fishers would be GPS. Looks like they want to reinvent it
down here and the institutions do love it. It’s had two good wide-range-bar days
on good volume.

Have a good trading day. Keep your
helmets on.

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Seasonal Opener

BUY THE FEAR, SELL THE GREED

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