Triple Witch, Cycle, Full Moon

March 12, 2001
Kevin Haggerty

Intel
Friday produced expected down openings in
the major averages. The Nasdaq 100
(
NDX |
Quote |
Chart |
News |
PowerRating) opened down 2.3%, traded down to the 2.0 volatility
band which was 1824. The S&P 500
(
SPX |
Quote |
Chart |
News |
PowerRating) also traded down to its 2.0 volatility band which
was 1236. These bands held in a tight bottom Slim Jim for about three hours and
it looked as if we would get a late-afternoon bounce from the extreme bands.

This was not to happen as
the program traders attacked at 2:40 p.m. Both the NDX and SPX were in very
vulnerable positions and this program activity lasted until the close. This
was excellent timing by the attackers to leg into a trade by blowing out both
the NDX and SPX to new intraday lows by hitting the futures first and then doing
their stock.

In addition to a new low
below 1838 in the NDX and the SPX which was close enough to its 1214.50 low, in
addition to another depressing Intel Friday, the program trade was easy
pickings. Just for your education, I have included the charts of the SPX, NYSE
ticks and NDX below. You will see that the attack started on the 2:40 p.m. bar
for the SPX as the NYSE ticks went from +80 to -665 on one five-minute bar as
the SPX traded below 1236.Â

I have labeled the
subsequent sequences and swings in price and ticks, because these attacks happen
more often than you think, and usually with precision at key inflection points.
The good news is that they also happen on the long side, so it is very important
for daytraders to be aware of this loaded-gun type of program trading.

The NDX program started
with a break below 1824. Save this text for future reference. The
Trap Doors and contra rallies didn’t carry very far as both the NDX and SPX went
sideways after the airpocket opening. There were some, however, like
(
MU |
Quote |
Chart |
News |
PowerRating),
which had closed at 42.85 on Thursday, gapped
down on the open and traded to an intraday low of 39.93 on the opening bar. This
was -6.8% and right on the 1.5 volatility band of 39.95. It rallied quickly to
41.34, then went sideways, and hit an intraday high of 41.95, before fading to
close at 40.75.Â Â

When you get these kinds of
across-the-board emotional days, it is very important to scroll your intraday
charts for setups. As you have read here before, these emotional moves are great
for daytraders and this week has the potential to be excellent for daytraders,
both long and short.Â

This week brings us triple
witch, some time cycles in play (according to Carolyn Boroden) and then throw in
the full moon. The market makers, I’m sure, will be hitting stocks in Instinet
this morning to catch the follow-through retail selling on the open as
the media hypes it down big.

For today’s reference, I
will do the extreme volatility bands for you in the NDX,
SPX and a tech stock, MU, so you can be alert for the contra moves.

Volatility Bands	NDX	SPX	MU
1.28	1743	1214.06	38.34
1.5	1731	1210.74	37.93
2.0	1704	1203.18	36.98

1.Â Â 1228.82

2.Â Â 1236.94

3.Â Â 1228.42

4.Â Â 1234.14

________________________________________________________

1.Â Â
-665

2.Â Â +556

3.Â Â -709

Â 4.Â Â +356

5.Â Â -381

Â 6.Â Â +236

_____________________________________________________________

1.
1804.24

2.Â 1837.25

3.Â 1802.91

4. 1820.47

(June
Futures)

Fair Value

Buy

Sell

14.05

.15.35Â

Â 12.75Â

Pattern
Setups

As emotional buying and
selling most often is gapped on the openings, there won’t be very many
continuation shorts available this morning, so you should be focused on
second-entry shorts after any contra move.Â

The
Basics, Capital Goods and Energies have all had 7-10 straight up days so some
money will come off the table in some of them.

Many
of these contra–rally longs can very easily turn into second-entry shorts if
they reverse Friday’s lows and then go south after a reflex rally.

Have a good trading
day.

Triple Witch, Cycle, Full Moon

BUY THE FEAR, SELL THE GREED

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