Stay Light And Stay Fast

July 5, 2001
Kevin Haggerty

Tuesday was
as expected with only 620 million shares trading on the NYSE and 869
million on the Nasdaq. The major indexes finished off small red but the semis,
biotechs and some of the financials finished green. These sectors have provided
the highest percentage of big cap intraday and short-term trading opportunities
over the past several months in addition to extended healthcare stocks.

The Nasdaq 100
(
NDX |
Quote |
Chart |
News |
PowerRating) closed at
1822.20, right up against its 50-day EMA of 1824.29 and above its 25-day EMA of
1799. On the five-minute chart, it gets going again above 1832 and of course on
the downside below the intraday low of 1799. The S&P 500
(
SPX |
Quote |
Chart |
News |
PowerRating) closed at
1234.47, still blocked by the 1240 50-day EMA and then the 1246 swingpoint low.
You now have some inflection points to start the day.

I would like to remind you that I try
to select high-probability pattern setups on the daily charts that indicate
buying/selling pressure by the Generals. If the volume is not present, then I am
looking at patterns and/or pullbacks with closes above the midpoint and
preferably in the top 25% of the range. These are not supposed to be stock touts.
They are alerts that the Generals are involved or the stock is sitting in a type
of pattern where the Generals like to get involved and the hedge funds like to
front run.

If the stock is also a big-cap stock
involved in programs, you can often get an added ticker to your trade. You must
remember: No entry, no loss, and a trader should only enter if the Generals show
up again and give you continuation. There
are many reasons that change the Generals’ aggressiveness from day to day, or
hour to hour, and the prices they are willing to buy or sell at.

I represented and traded for the
largest of these Generals, and you can rest assured it wasn’t any indicator or
commentator that determined how we tried to accumulate or distribute stock each
day or each hour. Follow the price and volume as it reacts at the many key
inflection points. Look for facts and don’t get sucked in by subjective
commentary — including mine. All traders have various levels of capital and
risk parameters. If you have deep pockets with something in them, you can lay
some more shorts out or take some more longs in if it’s just market noise that’s
affecting the price.

The institutions can average your
money all they want, but 99% of you don’t have the capital to play that game, so
why don’t you follow the Generals rather than to think they will follow you?
Preserving capital and risk management
lets you stay in the game. If you want to take major contra position trades, why
not just do it with options? The intraday trade is the easiest because you don’t
get on the train unless it leaves in your intended direction.

(September
Futures)

Fair Value

Buy

Sell

6.90

8.10

5.70

Stocks
Today

Have a good trading day. My next
commentary will be next Tuesday. Enjoy the weekend.

Tuesday’s S&P 500 five-minute chart
with 8-, 20-,
60- and 260-period
EMAs

Tuesday’s NYSE
TICK five-minute chart

Stay Light And Stay Fast

BUY THE FEAR, SELL THE GREED

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