The Whole Game
Owing to technical
difficulties associated with the new Yahoo! voice system, Kevin Haggerty’s audio
commentary is unavailable today. We apologize for any inconvenience.
You had
the whole game on Friday
with Triple Witch and rebalancing, as total volume was just over 1.5
billion with a volume ratio of 30. There were 445 million up and 1.05 billion
down and only 293 decliners over advancers, which points out the significant
program volume activity. The program action gave you an excellent opportunity
which coincided with the volatility bands and the .618 RT zone of 2496 framed
from the October ’98 low.Â
The NDX hit a low of 2511
vs. its 1.5 volatility band at 2517. The program started about 2:00 p.m., and
the NDX rallied 4.5% to 2624. If you didn’t act at the volatility band, you then
got a very common 1-2-3 double bottom entry with entry above 2543. There was a
good move in the QQQs. The NDX topped out on the 3:25 p.m. bar, and with the
programs done, sold down 2542, closing at 2552.
The SPX had the same kind
of action, selling down to an intraday low 1305 vs. its 2 volatility band of
1309 before mounting a program rally to a 1327 intraday high on the same 3:25
p.m. bar as the NDX 100. It then sold straight down to a 1311 close. This was
also a 1-2-3 entry pattern, and your entry was above the 1311 2-point with a
stop just below 1307. It was a good risk/reward setup if you were anticipating
the programs and rebalancing, which I alerted you to in Wednesday’s commentary.
This was another
reactionary trade to a change in direction from convergence of volatility bands
and a strong retracement zone. The entry pattern was clearly defined. If you
didn’t take it, then save this text and the chart for future reference.
With Triple Witch,
rebalancing and election out of the way, let’s check the current oil. The
Generals had bet on recession early, as the consumer staples
(
XLP |
Quote |
Chart |
News |
PowerRating) are +26%
for the three months ending Friday. While the utilities
(
XLU |
Quote |
Chart |
News |
PowerRating) are plus 21%. Bonds have had a strong
run, with Fed funds now pointing to ease and a neutral bias. The basics, using
the
(
XLB |
Quote |
Chart |
News |
PowerRating)‘s, are +19%, with most of the gain coming since early-to-mid
October. That tells you the Generals’ perception is soft. The techs, by using
(
XLK |
Quote |
Chart |
News |
PowerRating)‘s,
are down 21%, but we have just experienced a sharp 50% to 80% rally in many of
the momentum stocks I call the Chosen Ones.Â
So far, the 2496 .618 RT
level has held on a closing basis, and the NDX 100 has given us a 23% rally so
far off this level. For background music, the NDX 100 has declined 40% to the
.50 RT level at 2897. It then rallied +43% to 4147, which is the .618
retracement level, declined 41% to 2426, and closing that day at 2507 right on
the 2496 .618 RT level.
The most recent rally has
been 23% to the recent swing-point high of 2991. At the parabolic 4816 top, the
index was approximately 32% above its 30-week EMA, and at the recent 2426 low,
it was 30% below. So I guess you can safely say oversold, but with fear in the
air.
This bear market has given
us two good percentage retracement rallies so far, and on this one, the NDX has
yet to even close above its declining 10-week EMA following the 4147 high.
Hopefully, this rally will extend to the 3308 30-week EMA, which is a 36% pop
from 2426. If this retracement zone holds, then we will know shortly because the
burden is on techs. No tech rally means that we are going lower, so stay focused
on the semis.
FYI — stocks that have had
big moves because they were additions to the NDX 100 rebalancing on Friday were
(
BEAS |
Quote |
Chart |
News |
PowerRating) +7 5/8,
(
MLNM |
Quote |
Chart |
News |
PowerRating) +7 3/8,
(
EXDS |
Quote |
Chart |
News |
PowerRating) +5 1/8,
(
HGSI |
Quote |
Chart |
News |
PowerRating) +7 5/16.
face=”arial, helvetica”>(March Futures) | ||
Fair | size=2>Buy | size=2>Sell |
20.15 | Â 21.70Â | Â 18.70Â |
Pattern
Setups
Stocks today: Ones that set up on the daily chart
are: In the semis,
(
MU |
Quote |
Chart |
News |
PowerRating),
(
ADI |
Quote |
Chart |
News |
PowerRating),
(
AMAT |
Quote |
Chart |
News |
PowerRating),
(
TXN |
Quote |
Chart |
News |
PowerRating) and
(
TER |
Quote |
Chart |
News |
PowerRating). Also, in the bios,
(
PDLI |
Quote |
Chart |
News |
PowerRating). Also
(
CMVT |
Quote |
Chart |
News |
PowerRating)
and
(
CIEN |
Quote |
Chart |
News |
PowerRating). Also,
(
ADBE |
Quote |
Chart |
News |
PowerRating) on a recross to the upside of the 200-day EMA.
Have a good trading day.
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