Sequence

  • June 5, 2002
  • Kevin Haggerty

NYSE
volume increased for the fourth consecutive day at
1.48 billion, a volume ratio of 36, and breadth -353 vs. -1449 the previous day.
Nasdaq volume was 1.86 billion with a positive divergence of the volume ratio at
62. The Nasdaq Composite hit 1548 vs. our 1540-1500 zone objective. It rallied
to 1588 from that low.

The
(
SMH |
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PowerRating)s broke the
previous swing point low of 36.45 with an intraday low of 36.30. The .618
retracement is 36.05. The
afternoon rally from 36.30 carried to 38.10. They closed at 37.80. This is the
second reflex off the .618 zone. For you RST players out there, you must
remember the filters, such as the percentage from a long-term moving average, as
well as the slope at the entry swing point.

The Nasdaq Composite
(
$COMPX |
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PowerRating), SMH,
(
$SPX.X |
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PowerRating) and
(
$DJX.X |
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based on entry today. This is also in conjunction with the VIX CVR 3 setup. The
filters are not 100% right here, so daytrade entry only on the second entry
above yesterday’s highs, or else take an early intraday long setup below
yesterday’s high and keep it if it closes positive on the day.

The SPX gave us a Trap
Door entry on the fifth five-minute bar yesterday with a textbook setup, three
lower highs and lows after the first bar with a narrow-range/top-of-the-range
close as the signal bar. The signal bar low was 1033.42 vs. the 1033 .618
retracement level I gave you in the previous text. The 2.0 standard deviation of
a longer-term price line is 1036. The Trap Door bounce was good for 5 to 6
points in the futures before that move faded as the SPX moved sideways and down
until 1:00 p.m. The intraday low proved to be 1030.52 before the rally to 1046
and closing at 1040.69. Entry for the afternoon rally was a trendline break
above 1033.50, which was also above the 8- and 20-period EMAs on your
five-minute chart. There is always something going on at sequence, volatility
bands and zones. It’s where the music lives.  

Stocks
Today

There are some setups
after yesterday’s rally, especially in the semis, so entry can be taken
regardless of whether we think the zones below will be hit. The strategy remains
the same: take intraday entry and don’t take anything home unless you have a
profitable trade. Stay with the indices and proxies and away from stocks for
now. 

Yesterday’s action was
very narrow with bottom fishing in technology. The
(
$SOX.X |
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PowerRating) was +3.4% to
lead the tech reflex. 

Stock setups are the
(
SMH |
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(
KLAC |
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PowerRating),
(
AMAT |
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(
NVLS |
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(
MU |
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RSTs today. And also
(
MCHP |
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PowerRating),
and for bottom fishing,
(
NVDA |
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News |
PowerRating).

Other RST setups with
potential entry today are the
(
DIA |
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PowerRating)s and
(
SPY |
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PowerRating)s as long as the indices
give you entry. And also look at the
(
IJR |
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PowerRating), which has pulled back 10% to its
200-day MA, in addition to the
(
MDY |
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PowerRating)s.

Miscellaneous stocks are
(
FDO |
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PowerRating),
(
FITB |
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PowerRating) and also
(
SCIO |
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News |
PowerRating). 

Have a good trading day.

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

Five-minute chart of
Tuesday’s NYSE TICKS