Seven Day Run

June 8, 2001
Kevin Haggerty

The NDX
finished its run and finished
+3.1% on the day, led by a blast from the Semis as the SOX ended +7.9%. The Nasdaq 100
(
NDX |
Quote |
Chart |
News |
PowerRating) opened below the lower boundary of the Symmetrical Triangle mentioned
yesterday and held the prior day’s 1890 low. From there, it reversed the
triangle to the upside, running to 1946 before retracing 50% of the move and
back to the upper boundary of the triangle which acted as support. From that low
of 1917, it exploded to the 1963.31 close.

Because of the failure and
then go from the pattern, you were able to get trade-through entry in any or all
of the Semis. If you had checked your morning index screens and the daily
charts, you saw the setups from Wednesday’s trading just as I did. By
identifying that buying pressure from Wednesday, the Semis had to be in your
Thursday trading plan.

For the past five days, the
NDX has advanced 9% while the SPX is up 1.6%. As mentioned in previous text, you
should always be alert during the last few days of the month and the first five
of the new month. The S&P 500
(
SPX |
Quote |
Chart |
News |
PowerRating), after an early up to the 1275 down
trendline, dropped off quickly to a 1265 low right at that 1263-1268 convergence
discussed in yesterday’s text. From there we got a strong afternoon trend which
carried the SPX into a 1276.96 close.

There was nothing exciting
about the internals, however, as total volume was just under 1.1 billion, volume
ratio of just 51 and only 81 advancers over decliners. That is not what I like
to see as we approach the top of the trading ranges again which are 1982 for the
NDX and 1273 for the SPX.

The Generals will have to
put much more money to work than they did yesterday to get past the recent
swingpoint highs this time around. You saw some weakness in the Biotechs
yesterday as they back off from the 200-day EMA as evidenced by the BBHs and on
increased volume after the recent run up.

I have included both the
10- and 5-minute charts of the NDX in today’s text which shows you the
failure-and-go trade from the Triangle. They don’t show the entire afternoon, as
it is just an example for your records of being aware of all the inflection
points in advance so you are ready to go.