Tech Casino Green

January 17, 2001
Kevin Haggerty

Owing to
technical difficulties associated with Broadcast.com’s circuits this morning, Kevin Haggerty’s audio commentary
was unavailable today. We apologize for any inconvenience.

You should certainly expect
more two-way volatility with the semis and chosen ones as they react to news and
analyst noise. The Dow, led by the
Basics and Financials, gained 1.2%, but the real game will be with the techs and
related going forward. The volume ratio was positive at 62, with 721 million up
and 442 million down, while advancers led decliners by +544. Total volume was
1.2 billion.

As everyone debates and
waits for the techs and chosen ones to bottom, the rest of the market has
improved by leaps and bounds. The percentage of NYSE stocks over their
200-day moving average hit 66% yesterday, which has strong significance.

For those of you who have
been keeping my market dynamics daily table, you probably already know this, but
for those that don’t, I will recap. On 9/1/2000 the SPX’s high was 1530, closing
at 1521, with 63% of stocks above the 200-day moving average. On 10/1/2000, the
index closed at 1409 with just 53% of the stocks above their 200. On 10/19/2000,
at 1342, the percentage had dropped to 44%.Â

From there, the major
indexes led by techs and related continued down, with the low close on the SPX
at 1265 on 12/20/2000, but the percentage had improved to 51% as the bottoms
were made by the RLX, the Basics which include the FPP and the CEX, and also the
BKX. They started a strong upside move as the Generals started to discount.

The retail story is the
most humorous by the empty suits. It goes like this: “Same store sales are
bad. Holiday season was terrible. Consumers not spending. Pulling back. Brokers
downgrades.” Yet, the RLX has
gone from its 10/12/2000 low of 697 to a 916 high on 1/3/2001. That
is a 31% gain.Â

The SOX has been basing
for the past seven to eight weeks and many of the Semis have made their first
attempt to break out. Looking at
the sector indexes, I see that the following major sectors are above their
200-day EMAs: DRG, RLX, BKX, XBD, FPP,
CEX, OSX and XOI. The only ones below the 200 are the BTK, SOX and the Internet
indexes. The major indexes are strong with technology, so you see the SPX below
its 200-day EMA along with the NDX 100 and the Dow which has been criss-crossing
it in a trading range.

The message is: Do your
work daily and you will identify the money flow into the various sectors at
interesting levels on the Trading Tree and you can disregard the subjective
opinions that can only be an unprofitable distraction.

After that you will look
for pullback long entry in probably the Semis and chosen ones.

(March
Futures)

Fair Value

Buy

Sell

11.55

Â 12.90Â

Â 10.15Â

Pattern
Setups

Have a good trading day.

Tech Casino Green

BUY THE FEAR, SELL THE GREED

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