Trading Symmetry

• October 2, 2001
• Kevin Haggerty

The
(
SPX |
Quote |
Chart |
News |
PowerRating) and Dow were flat yesterday as
NYSE stock exchange volume dropped to its average at 1.171 billion shares. It
had a volume ratio of 38 and declines greater than advancers by 570. The NDX 100
(
NDX |
Quote |
Chart |
News |
PowerRating) ended -1.7% as techs cut a red bias all day. But contra sectors like
the
(
DRG |
Quote |
Chart |
News |
PowerRating),
(
BTK |
Quote |
Chart |
News |
PowerRating) and
(
HCX |
Quote |
Chart |
News |
PowerRating) all finished slightly green, in addition
to the
(
XAU |
Quote |
Chart |
News |
PowerRating).

The
(
QQQ |
Quote |
Chart |
News |
PowerRating)s continue
in what is now a seven-bar range between 30.43 and 27.20. The 10-day EMA is
29.56, and the 20-day EMA is 31.61. Retracement levels to the 39.90 swing point
high are .38 — 32.05, .50 — 33.55, .618 — 35.05, and .786 at 37.18. This
trading range will more than likely be resolved by Monday. 

The retracement levels
for the SPX to the Aug. 27 1186.85 swing point high from the Sept. 21 944.75 low
are .38 — 1037, .50 — 1066, .618 — 1094, followed by the .786 at 1135. The
EMA in play on the upside is the 20-day EMA at 1053. It’s always helpful to be
aware of these alert zones so you can observe the intraday action as they
approach these zones for possible setups.

There were two good
trades in the S&P futures
(
SPZ1 |
Quote |
Chart |
News |
PowerRating) yesterday, with the first one coming on the 10:00
a.m. bar breaking below the 1036 low mentioned in yesterday’s text. It traded
down to a 1028.80 intraday low on the 10:45 a.m. bar before reversing. The
second one was the ever-present 1-2-3 higher low entry on the 11:25 a.m. bar,
trading above the 1032.20 high and above the eight-period moving average of the
highs. The trend entry was almost the same trading above the 2 point high of
1033. This run took it to a 1043.50 high before a retracement started. If you
use the eight-period moving averages of high and low on a five-minute chart, you
also got the hook around the low that precedes solid 1-2-3s. I will include the
chart in tomorrow’s text for your records. 

We start the day with the
SPX at 1038.55 after six days up and a 20-day EMA of 1053, so you have to
expect some retracement to the 944.75 low, if not a new low. The news seems to
indicate that some visible war action will start soon, and the reaction will be
instant volatility. Greenspan will cut rates today which seems to fall into the
category of “Who cares?” at the moment. Retracement shorts at moving
averages and alert zones should be taken because the stop is close and the
reward large if we continue south.

Stocks
Today

Pattern setups on the
daily chart are few and far between, but some of them on the longside are
(
BAX |
Quote |
Chart |
News |
PowerRating),
(
IMCL |
Quote |
Chart |
News |
PowerRating),
(
GILD |
Quote |
Chart |
News |
PowerRating),
(
STJ |
Quote |
Chart |
News |
PowerRating),
(
HCA |
Quote |
Chart |
News |
PowerRating) and
(
MYL |
Quote |
Chart |
News |
PowerRating).

Retracement shorts are
(
LEH |
Quote |
Chart |
News |
PowerRating) and
(
MWD |
Quote |
Chart |
News |
PowerRating). They’ve both retraced to their 20-day EMA, but an
intraday setup is needed if we go red today, as both closed in the top of their
range on even smaller volume than previous days. Also,
(
UNM |
Quote |
Chart |
News |
PowerRating) retraced to its
20 and gave us a reversal bar yesterday, and also
(
IFIN |
Quote |
Chart |
News |
PowerRating).

Continuation pattern
short entries are
(
BRKS |
Quote |
Chart |
News |
PowerRating),
(
KO |
Quote |
Chart |
News |
PowerRating),
(
YUM |
Quote |
Chart |
News |
PowerRating),
(
ALL |
Quote |
Chart |
News |
PowerRating) and
(
KMB |
Quote |
Chart |
News |
PowerRating) —
use the 200-day EMA as a stop. In this market mode, continue to trade the HLDRs,
like the
(
SMH |
Quote |
Chart |
News |
PowerRating)s,
(
BBH |
Quote |
Chart |
News |
PowerRating)s,
(
PPH |
Quote |
Chart |
News |
PowerRating)s, sector SPDRs like
(
XLK |
Quote |
Chart |
News |
PowerRating),
(
XLF |
Quote |
Chart |
News |
PowerRating),
(
XLE |
Quote |
Chart |
News |
PowerRating) and
(
XLB |
Quote |
Chart |
News |
PowerRating), in addition to the market proxies, such as
(
QQQ |
Quote |
Chart |
News |
PowerRating)s,
(
DIA |
Quote |
Chart |
News |
PowerRating)s and
(
SPY |
Quote |
Chart |
News |
PowerRating)s. They have more symmetry and it is easier to identify
a move. 

Have a good trading day.
Keep your stops close and be flat at the end of the day.

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

Five-minute chart of
Monday’s NYSE TICKS

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