The Here And Now

• July 28, 2000
• Eddie Kwong

Every day, there are going to be people in the
financial media trying to make predictions about where the market is headed. Your
job as a trader is to cover your ears.

You have to take one day at a time and simply act upon what the market is
telling you. I’m sure that that’s the first time you’ve heard that. Yeah, right.

One of the things I look for is confluence. That is–a combination of
technical patterns that agree with one another, all occurring at the same time.
You cannot predict these confluences. But you can be on the alert for them and
spot them as they develop. Remember, the development of these patterns in the
“here and now” overrules anything you can infer from something that
happened in the past. In other words, whatever buy signal you had yesterday is
irrelevant to what’s happening now. 

Now let’s look at the setup in the current market.

In July 19, 2000’s Chart of the Day I wrote about the following chart in the
Nasdaq 100 Tracking Stock
(
QQQ |
Quote |
Chart |
News |
PowerRating).

The QQQ, a good proxy for the Nasdaq 100, was bouncing down from
its 61.8% retracement between the March 24, 2000 high and the May 24, 2000 low
and the top of a downtrend channel. This was shortly after the number of
mentions of the term “summer rally” had hit a peak in the financial
news.

As of right now on Friday, July 28, 2000, the QQQ is following
through off that confluence.

At the same time all of the above has
been happening, you also had many stocks forming head-and-shoulders tops.
This was the topic of Thursday’s
Chart of the Day. Study the charts of
(
MLNM |
Quote |
Chart |
News |
PowerRating),
(
BBH |
Quote |
Chart |
News |
PowerRating),
(
GENE |
Quote |
Chart |
News |
PowerRating),
(
CEGE |
Quote |
Chart |
News |
PowerRating),
(
GERN |
Quote |
Chart |
News |
PowerRating), [IMNX]IMNX],
(
AAPL |
Quote |
Chart |
News |
PowerRating),
(
ISLD |
Quote |
Chart |
News |
PowerRating),
(
MU |
Quote |
Chart |
News |
PowerRating),
(
BRCM |
Quote |
Chart |
News |
PowerRating),
(
NVDA |
Quote |
Chart |
News |
PowerRating),
(
TQNT |
Quote |
Chart |
News |
PowerRating), and
(
CREE |
Quote |
Chart |
News |
PowerRating) to get a feel for how these patterns conspired to
produce the market action we’ve been seeing lately.

Added to that, you have the Nasdaq bellwethers Intel
(
INTC |
Quote |
Chart |
News |
PowerRating),
Oracle
(
ORCL |
Quote |
Chart |
News |
PowerRating), Sun Microsystems
(
SUNW |
Quote |
Chart |
News |
PowerRating), and Cisco
(
CSCO |
Quote |
Chart |
News |
PowerRating) all
acting in concert to the downside. The following chart of Cisco
(
CSCO |
Quote |
Chart |
News |
PowerRating) is
bears an eerie resemblance to that of the QQQ. 

If you’re saying to yourself that you can only see or
recognize these kinds of relationships after the fact, you’re wrong. While it’s
far from easy, it’s entirely doable if you stay focused on the present. . .not
the past. . .not the future–just the present. 

Have a wonderfully restful weekend,

Eddie