Travel Range

February 2, 2001
Kevin Haggerty

This didn’t last long as
the NDX reversed from 2555 to the intraday high of 2627, which was a 1.618
extension of the first leg down. That ended at noon with another down draft to
2563 by 2:00 p.m., before the afternoon rally took the NDX back up to 2612,
closing at 2607. The travel range
went: -45, +72, -64, +49, for a total of 230 points. To put it in perspective,
the NDX closed Wednesday at 2593. The 230-point travel range is equivalent to a
9% advance from 2593. Opportunity
presents itself both ways in that kind of volatility.Â

The SPX had the same
sequence as the NDX, including the Fib extension. The
travel range was 48 points although the daily high/low spread was only 14
points. Some will say it was a quiet day. I don’t think so. Individual
stocks have their own rotation and you try to get in sync. AMCC, for example, a
stock I said could run into a struggle between 85 and 90, bottomed at 45 7/8 on
11/30, down from 109 3/4 on 9/29. It rallied to a recent high/close of 87 1/8
right at the .618 retracement level. In six days, it declined to the 68 low
yesterday, a 22% decline.

There was a good
continuation short going into yesterday, but today it also should be a long side
alert if it sets up on the intraday chart. The 200-day EMA is 67.82, the 50-day
EMA is 67.25 and yesterday’s low was 68, before bouncing and closing at 70.125.
I see that the 200-SMA is 70.43. It
doesn’t set up as a long on the daily chart, and you certainly know where
continuation short entry is below yesterday’s low on the EMAs, but based on the
above-mentioned inflection points and its six-day pullback which still leaves
the short-term uptrend intact, you must be on a long-side alert today.

For a daytrader, it’s a
game of chess. We know the SPX is into a resistance area, but yesterday’s close
didn’t confirm Wednesday’s reversal day. In fact, the SPX hasn’t even closed
below its 10-day EMA since it first closed above it in this rally on 1/10. That
is strong price persistence for the major blue chips. The
NDX has closed just below its 10-day EMA of 2623.42 the past two days, but use
it as an inflection point if the up game is on today. The NDX has range
congestion and convergence at the 10-, 20- and 50-day EMAs. Volatile things
happen from that pattern.

(March
Futures)

Fair Value

Buy

Sell

7.25

Â 8.55Â

Â 5.95Â

Pattern
Setups

On the short side, BBHs
could have another down day below yesterday’s low and anything in the NDX I
still play the
(
QQQ |
Quote |
Chart |
News |
PowerRating)s because if we get a downdraft they give you good movement.

Have a good trading day.

Travel Range

BUY THE FEAR, SELL THE GREED

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