Trap Door Time Again!

  • October 11, 2000
  • Kevin Haggerty

Any
chance for a change-in-direction bar or
a close above the high of the low day was stopped dead with
(
XLNX |
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PowerRating), as the
semis got purged with the SOX down 10.1% on the day. The Nasdaq 100
(
NDX |
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made an early attempt after the retail order flow was taken down deep for the
opening, as the NDX opened at 3272, but then rallied to 3337 on the inevitable
contra move. That’s where it ended, as it traded down to the .618 RT zone again,
hitting an intraday low of 3175
before closing at 3188, -4% for the session. 


The internals, as per the
volume ratio, negative vs. positive, got better in both the Nasdaq and the
S&P 500, despite lower lows. I see that
(
AMD |
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today, but what’s left? The stock has already fallen from 48 1/2 in June to 21.3
on Monday and closed at 22 3/4 yesterday. Sure,
it can go lower as the holders sell out, so as to get that feel-good “Thank
goodness I don’t own it anymore” status, at which point, like in every
previous tech debacle, the process starts all over again and the analysts start
to talk up the next cycle. You didn’t see them early on for their sell
recommendations — and probably never will.


The chosen ones remain a
daytrader’s dream and a position trader’s nightmare, as they have great travel
range both long and short on an intraday basis — but certainly not your friend
if you take them home overnight, which is not what the doctor ordered.


The sun will come out again
after this purging of tech and related. Everything else has fallen and now the
brokers have joined the chosen ones on the downside, and some of the strategists
at the brokerage firms are recommending a definite underweighting in tech. 


The Generals told you what
they thought when they blew the cyclicals like papers, chemicals and metals down
big time and bought utilities up to new highs. As I look at the screen, I see
some big discount prices welcoming the retail sell orders this morning, so it
looks like trap-door time early on, and after the contra rally we will see what
the Generals want to do for the day.














face=”arial, helvetica”>(December Futures)


Fair
Value

size=2>Buy

size=2>Sell


15.50


17.10

14.30


Pattern
Setups


Again, there are no daily setups in
this kind of a market. It’s strictly a reaction market but trap-door setups will
probably be very rewarding on the contra move in:



(
PMCS |
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(
JNPR |
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(
CIEN |
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(
AMCC |
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(
NTAP |
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PowerRating),
(
BEAS |
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(
VRSN |
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(
SEBL |
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(
BRCD |
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(
BRCM |
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(
CHKP |
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(
RBAK |
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PowerRating) and
(
SUNW |
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PowerRating).


Have a good trading day.


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