S&P Hits Its Mark, But Internals Vulnerable

S&P Hits Its Mark, But Internals Vulnerable  We got our new high close in
the S&P 500 yesterday, thanks to a flurry of
Dow Jones news “raps” late in the day by Greenspan, his cronies, and the ever-present Bob Rubin.

I love it, I love it, I love it! The S&P 500 tacked on about 10 points in the last hour of
trading to once again make new highs and ensure the all-time high close. But the Dow 30
finished off 8.47 points, the Dow Transports closed down 24.39, and the Utility Index (UTY)
dropped 4.58, none of which shows much support for the action in the S&P.

Volume was the lightest it has been in the past five days, breadth was negative, and
there were only 14,696 institutional blocks (10,000 shares or more) vs. 17,469 Friday. I
also noticed the long bond did nothing, closing below its midpoint for the second day in a

To get the S&P going, I said they had to come for some of the techs–and they did. Dell,
Cisco, Intel, Microsoft, and EMC rallied strongly, but on lower-than-normal volume. Rising
prices, lower volume–a red flag for me, and I hope for you.

Target Stocks Of The Day  The S&P 500 has made two wide-range up bars and a
third up day on a narrow-range bar of only 11.1 points. With the divergences in the averages and
breadth yesterday, today or tomorrow could provide a good short opportunity.

If we get an up move today, the following stocks have good pattern set-ups: Oracle [ORCL>ORCL],
Maxim Integrated [MXIM>MXIM], American Eagle Outfitters [AEOS>AEOS], Intuit [INTU>INTU]
PSI Net [PSIX>PSIX], Progressive Corp. [PGR>PGR], Tyco [TYC>TYC], Lucent [LU>LU], and
Cisco [CSCO>CSCO].

If the market heads south and consolidates its recent gains, use the SPDRs [SPY>SPY] on the
short side. You don’t need an plus tick to sell short, but you must be able to borrow them from
your broker. If you don’t know what they are, don’t trade them until you get SPY-educated.

Editor’s note: If you want to learn more about Kevin Haggerty’s trading strategies, click
on the link below to go to his new series of tutorial articles.