‘THEY’

 

In
Monday’s text we said the four-week narrow-range pattern
would
be resolved shortly and that the major indices were trading just below their
30-week EMAs, which are good pivots for shorts at a declining trendline and/or
upside pivots if the Generals make a year-end push to the upper confluence of
resistance for the SPX
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at 1174-1208. This is, of course, after
the SPX fights its way through the 1150-1160 maze.

The DJX
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and SPX haven’t broken out of their trading ranges yet, just the Nasdaq. The DJX
closed at 98.94 vs. its 30-week EMA of 98.87 and below its 200-day EMA of
100.26. The SPX closed at 1144.80 vs. its 30-week EMA of 1151.30 and the 144-day
EMA now at 1153.90. Above that, you have square of 9 resistance at 1156-1157 and
the .618 retracement to the May high at 1174, with the 200-day EMA at 1180.

The purpose for always
giving you these alert zones is to keep you focused as the major indices
approach these levels so you can combine the sequence trading on the intraday
charts with these alert zones. When there is a confluence of both, you get
high-probability trades. When you get both in sync with the daily charts, like
we did in September/October, you get excellent position trades. My expectation
has been for a shallow pullback and then up into year-end. If they decide
to push the indices without a pullback, then we will get a chance to roll up our
protective puts against positions bought at the September/October low
zone.

Yesterday, the SPX and
Dow both advanced +1.3%, but the NDX 100
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, led by the low-priced
junk stocks, ran +4.3%, with the Nasdaq Composite at +3.1%, which closed above
its 200-day SMA and below its 200-day EMA. Shorts were squeezed as they took the
Nasdaq out of the trading range and penetrated the 1934-1950 resistance level
the techies are all focused on. The top 10 stocks in the NDX 100 yesterday
average about $8.00 in price. Volume for the Nasdaq was 5% above average,
but with a volume ratio of 86.

The NDX 100 exploded out
of the 10-point all-day trading range, 1595-1585, on the 2:00 p.m. bar, which is
par for the course, included with the 3:30 time slot, another favorite of the
futures gang. After a three-bar pullback, the NDX exploded for a 15 point gain
on — you guessed it — the 3:30 p.m. bar. The NDX closed at 1634.27, just above
its 30-week EMA of 1614. The NYSE volume was 1.3 billion, and taking out the 295
million Enron
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ENE |
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volume, it was light. The breadth was excellent at
+1246.

It was a bonanza day for
most daytraders, as we had many trade-through stocks, led by our semis, as they
declared yet another semiconductor bottom. I think the Generals had obviously
made that decision before yesterday, seeing that the
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was already
up 56% since the September low, and many stocks are up well over 100%. We also
caught nice moves in
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BJS |
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,
(
SLB |
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,
(
THQI |
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and
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FFIV |
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, just to
name a few. On the short side,
(
HGSI |
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was our friend, breaking out of a
defined short pattern on the daily charts.

Today we’re ready for
continuation longs if the squeeze continues, along with the momentum players
piling on. Second entry intraday long setups early on are advised. Don’t chase stocks.
Air pocket shorts will again be set up by the momentum players, so heads up for
volatility band trades on the short side for today and tomorrow.

Stocks
Today

In the semis, which had
big percentage up yesterday, but not big volume, look at
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, which was
the leader in volume yesterday at only 45% above its average volume,
(
MXIM |
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,
(
ISIL |
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,
(
MU |
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and
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MSCC |
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.

Other stocks:
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WLP |
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,
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SYMC |
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,
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LTR |
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,
(
MERQ |
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,
(
PMCS |
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,
(
PCAR |
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,
(
AA |
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,
(
GP |
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,
(
DOW |
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,
(
IDPH |
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,
(
ICOS |
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,
(
PDLI |
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, and in the energies, a couple
of laggards, if they want to play that game again, its
(
RIG |
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,
(
CAM |
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,
(
HAL |
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and
(
SLB |
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.

Have a good trading day.

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

Five-minute chart of
Tuesday’s NYSE TICKS

Additional resources from Kevin Haggerty:

If you would like to receive
Kevin’s daily volatility bands to identify price reversal levels in stocks, click
here.

To learn exactly how to trade like Kevin
Haggerty, click
here.

Here are tools that Kevin uses on the TradingMarkets
Indicator page.
To learn more about how to use them, click
here.



S&P
500 Index Screen

Nasdaq
100 Index Screen

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Day wake up call

Change
in Direction