Thanks For The Opportunity

January 18, 2002
Kevin Haggerty

The major indices worked
higher from 10:00 a.m. into the close. The SPX closed at 1138.88, just under its
50-day EMA of 1140, its 10-week EMA of 1143, and you have the 30-week EMA just
above at 1151, which as you should remember, is the first confluence of
1150-1160 resistance before any attempt can be made to get above that 1174-1208
zone.

Any intraday short setups
can be taken into the EMAs with stops just above. Do this same exercise for the
(
QQQ |
Quote |
Chart |
News |
PowerRating)s and
(
DIA |
Quote |
Chart |
News |
PowerRating)s. By definition, this uptrend does not continue until
we get higher highs. I suggest you keep the weekly charts of the major indices
and the monthly charts with a 12-month EMA close by before you get carried away
with any position bets to the upside. You are, I hope, and should remain fully
hedged in your position holdings. When the game is below the line, i.e., all the
major averages, the higher probability is to sell resistance and to buy oversold
weakness, especially in confluence with retracement levels.

Yesterday’s reflex left
us with many pullback setups at the 20-, 50- and 200-day EMAs. There were many
top-of-the-range closes on increased volume. I see that my favorite virus stock,
(
SYMC |
Quote |
Chart |
News |
PowerRating), had a moonshot day of +8.4 points on 3.6 times its normal 30-day
average volume. It was not a trade-through entry as it gapped open to 71.69 on
earnings news from the previous close of 66.95. With all of the e-mail
transmitted viruses I have been fixing for the last two months, I would say the
demand for Norton Antivirus will remain strong.

The
(
BBH |
Quote |
Chart |
News |
PowerRating)s closed at
124.15, just under its 200-day SMA of 124.46 and right at the neckline of a
three-month head-and-shoulder top pattern. There was a significant increase in
volume. Focus on the biotechs because we will get either continuation shorts
from daily chart setups or else good reflex intraday longs if the Generals show
up at this longer-term moving average.

Stocks
Today

We have option expiration
today, and I have no clue whether the Generals will show up for a continuation
day or whether the program gang will be operating alone. But I do know one
thing: We’ll make the trading plan and put it in front of us with our entry
points and be ready to catch the train if it leaves.

On the shortside, stay
with the index proxies, and also the BBHs if they recross the 200-day SMA to the
downside after an early up.

Have a great trading day,
and have a good weekend.

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

Five-minute chart of
Thursday’s NYSE TICKS

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Thanks For The Opportunity

BUY THE FEAR, SELL THE GREED

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