Thin Day Ahead

July 3, 2000
Kevin Haggerty

The New York Stock Exchange volume
ratio was only 42 as the key overweighted stocks led the late surge and many of
the under-performing Dow-type stocks were sold off. The Nasdaq, on the other
hand, had a volume ratio of 67, which reflects the markup of the techs and other
related over-weighted stocks. Most all growth fund managers remain heavily
overweighted in techs, and it should be no surprise to you when they move at the
end of the period. Hopefully, we will get a few strong days from new monies
being put to work but keep in mind that we have now entered the low-performance
time of the year.Â

Starting the second half of the year,
it is always good to recap the major sectors so as to focus on the strength. The
strongest sectors will see the index trading above both its 10-week and 30-week EMAs.
Sectors that reflect this are the SOX, MSH, XBD, DRG and OSX. The XOI is trading
below its 10-week but above its 30-week. In all cases, the 10-week EMA is above
the 30-week EMA. The negative sectors, trading with the 10-week trading below
the 30-week and the index trading below both of the EMAs, are BKX, RLX, FPP and
CEX. The Internet index, the IIX, is trading above its 10-week at just 1 1/2
points below its 30-week. The best relative strength is being shown by the DRG
as it went out with an RSI of 81.6 and just 3 points below its all-time
high.Â

This is a good exercise to keep your
trading plan focused on the right sectors. Trading
will, of course, be very thin today, so keep your position-size smaller and your
stops tighter.

Program
Trading Numbers

(September Futures)

Fair
Value

Buy

Sell

18.05

19.30

16.90

Pattern SetupsÂ Â

Have a good trading day and have an
excellent Fourth of July.

Thin Day Ahead

BUY THE FEAR, SELL THE GREED

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