Slim Pickings

  • May 6, 2002
  • Kevin Haggerty

Friday
was another in a continuation of
sloppy down days. The NYSE volume was average at 1.297 billion, a volume ratio
of 39, and breadth slightly positive at +165. The Nasdaq was down 1.9% on the
second-lightest volume in five days at 1.98 billion and a volume ratio of 23,
with breadth -292. The Dow
(
$INDU |
Quote |
Chart |
News |
PowerRating) ended -0.8%, and the SPX
(
$SPX.X |
Quote |
Chart |
News |
PowerRating) -1.0%, most of which came by 10:00 a.m. before going sideways
for the remainder of the session.

The
(
$SOX.X |
Quote |
Chart |
News |
PowerRating) was
down -4.7% following a -4.4% day on Thursday. Breaking below 500, the bottom of
its recent trading range, the SOX went right to 480 and closed there. The
(
SMH |
Quote |
Chart |
News |
PowerRating)s closed at 38.10, with the .618 retracement to the September low at
36.05 and the .786 at 32.21. The .50 retracement to the September low is just
above at 38.75. Seminar veterans should see the RST pattern now setting up for
the SOX, and it’s also coming in an inflection zone. The entry filter we use for
RSTs only gets you in after the reversal change in direction. We follow it, not
predict it.

There continues to be
more than enough pessimism in this oversold tech rout, setting up would could be
a very tradable rally, especially on any more weakness this week. The NDX 100
(
$NDX.X |
Quote |
Chart |
News |
PowerRating) now has 20 stocks at less than $10, and a total of 35 stocks at
$15 or under. Looked at from the other end, and you know how from a daytrading
standpoint you like to trade stocks at $50 or higher, I see that there are only
eight stocks that closed Friday at $50 or better. 

The
(
IJR |
Quote |
Chart |
News |
PowerRating) and
(
MDY |
Quote |
Chart |
News |
PowerRating) continue in their own bull market above their moving averages, while
the
(
$DJX |
Quote |
Chart |
News |
PowerRating) closed at 100.07, just below its 200-day EMA of 100.91 and above
its 200-day SMA, which is 99.23. The Nasdaq Composite closed at 1613, which is
less 5% above a zone which could serve as a base for a significant trading
rally. On a tech rally, I believe the SMHs are a better choice than the
(
QQQ |
Quote |
Chart |
News |
PowerRating)s, which are loaded down with teenagers, some of which won’t be in
business a year from now under the same name, or else working their way out of
Chapter 11.

Stocks
Today

There weren’t very many
great setups on the daily chart, but the few that were are as follows:
(
ITW |
Quote |
Chart |
News |
PowerRating),
(
ITT |
Quote |
Chart |
News |
PowerRating),
(
FITB |
Quote |
Chart |
News |
PowerRating),
(
LMT |
Quote |
Chart |
News |
PowerRating),
(
EXPE |
Quote |
Chart |
News |
PowerRating),
(
BBBY |
Quote |
Chart |
News |
PowerRating),
(
LEN |
Quote |
Chart |
News |
PowerRating),
(
MMM |
Quote |
Chart |
News |
PowerRating),
(
MYG |
Quote |
Chart |
News |
PowerRating),
(
TKR |
Quote |
Chart |
News |
PowerRating),
(
THC |
Quote |
Chart |
News |
PowerRating),
(
VAR |
Quote |
Chart |
News |
PowerRating) and
(
SAFC |
Quote |
Chart |
News |
PowerRating). 

Have a good trading day.

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

Five-minute chart of
Friday’s NYSE TICKS