To Hike Or Not To Hike
 The institutions took a well-deserved rest yesterday after taking the S&P 500 up 13.4% in 20 trading days.  It certainly indicates they’re not too concerned about Greenspan. Many of the brokerage-research types think the Fed will raise interest rates .25 point due to the tightness in the labor market.
The institutions will be waiting to load up for the year-end run There was no reason for the institutions to play the game yesterday because if Greenspan tightens, we’ll get the typical S&P futures overreaction, sell programs will kick in, specialists will pull the plug and the married put gang will become active–all leading to lower prices. The institutions will be waiting there to load up for the year-end run to make sure the S&P 500 (and their funds) have double-digit returns. That’s good for us.
If Mr. G doesn’t tighten, and the market overreacts to the upside, who cares? The overreaction will take the averages up, and the institutions won’t have to buy as much of the key stocks in the averages at the higher prices in order to push the S&P to 20% or better by the end of the year. The Generals are good, and they have the money to make it happen–yours and mine.
Pattern Setups  Watch for Slim Jims today, because if there is a positive overreaction, some stocks will fly. Focus on Internets, telecommunications and some of the major techs that are above their 10-, 50- and 200-day exponential moving averages (EMAs), with high relative strength, ADX readings of 25 or higher, and +DMI greater than -DMI.
Figure 1.  Diamonds Trust (DIA), daily.  Source: Quote.com.
Stocks to watch: Tellabs [TLAB>TLAB], Nortel Networks [NT>NT], Comverse Technology [CMVT>CMVT], Nextel [NXTL>NXTL], Citigroup [C>C], International Paper [IP>IP], Schering Plough [SGP>SGP] and Legato Systems [LGTO>LGTO]. Also watch the Diamonds [DIA>DIA] in a tight consolidation (see Figure 1); any breakout above 108 1/16 gives them some free sailing.
Program Trading NumbersBuySellFair Value6.353.955.15
If you want to learn more about Kevin Haggerty’s trading strategies, click on the link below to go to his series of tutorial articles.