Tech and Momentum Frenzy Alive and Well
Yesterday you had four
major sectorscolor=#800000> green all day, the [$SOX.X>$SOX.X], [$MSH.X>$MSH.X],
[$XBD.X>$XBD.X] and the Internets using the proxy of the HHHs. The techs were led
by power moves in Sun Micro [SUNW>SUNW], Oracle [ORCL>ORCL], EMC
[EMC>EMC], and Cisco [CSCO>CSCO], which came on again in the afternoon to
finish up 3 15/16. You were able to get a pullback entry in Cisco [CSCO>CSCO]
after the retail orders were filled early on and the stock pulled back to 106.
Yahoo! [YHOO>YHOO], [CMGI>CMGI] and Qualcomm [QCOM>QCOM] put in big
momentum moves, as did Broadcom [BRCM>BRCM] and Network Solutions
[NSOL>NSOL] to name just a few.Â
| “The fear and air pockets return in a day, so you must play it very tight .” |
Merger mania abounds, with everyone
chasing media stocks. The drugs pulled back after a big day on Friday and the
[RLX>RLX], [BKX>BKX], [XOI>XOI] and [OSX>OSX] were red all day. It
was obviously not a broad market advance. The techs and Internets were enough to
drive the S&P 500 cash index +16 points, while the Nasdaq 100 [NDX>NDX]
finished +187 points and the Dow took a backseat, only +50. There is plenty of
maneuvering by the institutions during this reinvestment period as we traded
over 1 billion shares again with breadth positive by half of
Friday’s.Â
Up volume of 558 million, down volume of
451 million, which tells me quite a few decisions on weighting and allocation were
on the agenda. The long bond finished off 12 ticks but of course no one cared,
as fear wasn’t on the table yesterday. With all the media hype, the regular
media and TV broadcasters forgot that we’re supposed to be afraid because of
rising rates.Â
We have seen over the past few days that
the tech and momentum stock frenzy is alive and well as the Generals bought the
pullback. They also came back to the big Internets. It’s this institutional
momentum that makes continuation entries of these stocks so effective, but as
you have seen, it changes on a dime. The fear and air pockets return in a day so
you must play it very tight. If you are a position trader of any timeframe, do
yourself a big favor and get educated on the various option strategies that are
infinitely better for your pocketbook than playing the stock by
itself.
| href=”file:///C:/WINDOWS/TEMP/query/indicators/commentary/43-771.cfm?link=43-771″>Program Trading Numbers | ||
| Fair Value | size=2>Buy | size=2>Sell |
| size=2>Â Â Â Â Â 13.20 | size=2>14.45 | size=2>12.10 |
Pattern
Setups for today: Legato
Systems [LGTO>LGTO], EchoStar [DISH>DISH] (good entry will be crossing the
20-Day EMA), GE [GE>GE] (same kind of an entry crossing the 20-Day EMA),
Xilinx [XLNX>XLNX], Brocade [BRCD>BRCD], Internet Capital Group
[ICGE>ICGE], and also Merck [MRK>MRK], which pulled back at one-half of
the prior day‘s 5 5/8-point move to
close at 72 3/4. The 200-Day EMA of 72 1/8 is right there so look for entry on
your five-minute chart if the drugs are green today. Two of the favorite
retailers finished in the top of their range and with the volatility now down a
little bit, it looks like they’re ready to go if they come back for these today:
Home Depot [HD>HD] and Wal-Mart [WMT>WMT].
Have a good trading
day.