Trading Where The Action Is

The market continues to have Greenspan tunnel vision, but that’s not hampering some of the good trading moves in many of the high relative strength momentum stocks.

Techs and telecommunications led the market yesterday and left good setups for today. The Dow and S&P lost small on moderate volume, while the NDX finished plus 29 for the day, which means we look for tech-related setups.

For those of you who traded the QQQs yesterday, they only traded 11/16 below 110 before reversing and closing at the top of their range. The short-term direction of the QQQs is still up; until they close below the low of the high day (110), it will remain that way.

Target Stocks Of The Day   As I said, we’ll pursue the tech-related setups, but with focus intensifying on inflation, you should look at two commodity related plays that set up yesterday: Phelps Dodge [PD>PD] and Alcoa [AA>AA]. They’re both continuation entries.

Some tech setups include Yahoo [YHOO>YHOO], Knight/Trimark [NITE>NITE], Go2Net [GNET>GNET], Intuit [INTU>INTU], PSINET [PSIX>PSIX], Pixar [PIXR>PIXR], Immunex [IMNX>IMNX], Network Appliance [NTAP>NTAP], Alltel [AT>AT] and Network Solutions [NSOL>NSOL].

For those of you who just trade NYSE stocks, I apologize, but we have to go where the momentum is, and the institutions are really taking these stocks and running them when they set up. If you have the necessary execution capabilities, pick the ones with the best entry. There are many other setups–take a look at other Internet names, electronic brokerages and major techs.

Program Trading Numbers
BuySellFair Value
14.7510.2512.60
With the futures down slightly around 8:30 AM ET, it doesn’t look like the market will run on the open. The best that could happen is we open flat to down and start to rally again. That way, we’ll get trade-through entries.

Editor’s note: If you want to learn more about Kevin Haggerty’s trading strategies, click on the link below to go to his new series of tutorial articles.