Triple Witch Friday

June 12, 2001
Kevin Haggerty

It was a
non-decision day for the Generals as
they sat on their proverbial buy hands — which usually means the averages slide
down. Total volume was only 856 million shares, the volume ratio at 28, and
declines led advances by 557. The Nasdaq 100
(
NDX |
Quote |
Chart |
News |
PowerRating) opened at 1885, the prior
day’s low, traded immediately below the 50-day EMA pressure point of 1879, then
made an intraday low at 1826, traded up to 1855, closing at 1846.50, -3.4% on
the day. 1826 and 1855 become our first two inflection points today. The short
levels were in your trading plan, I am sure, and if not, then you’re in the
wrong sport.

The S&P 500
(
SPX |
Quote |
Chart |
News |
PowerRating)
broke the 1260 Double Bottom, our first intraday inflection point, then traded
below the next one which was the 1254 50-day EMA, while making an intraday low
at 1249.23 with the key 1245.96 inflection point right there. We are short-term
oversold with Triple Witch this Friday, so you have to expect knee-jerk
volatility with news and programs. The SPX closed at 1254.39, -0.8% on the day,
and right on its 50-day EMA which is this morning’s inflection point. You should
be prepared to also play a reversal of the 1245.96 low if they take it out
first, shake the tree, then back above it to the upside.

The NDX resistance drops to
the 1885-1890 level, along with its 50-day EMA at 1879. The key area is 1768
first, then 1743 which takes the index down on a continuation of a Fib
retracement which is, in my opinion, the highest probability. A waterfall down
into July or August wouldn’t surprise me in the least. By the way, how many of
you bought the QQQ straddles mentioned in last week’s text?

Checking the S&P 500
and NDX 100 screens this morning told me nothing, as no one sector or group had
a concentration of volume. FYI, the first 13 NDX stocks with increased volume
were all down, which led the NDX to a -3.4% day. The first thing to look at in
the morning are the screens. If not, then you shouldn’t read this column because
it is based on fact and what we see, not subjective opinion unless stated as
such.

Starting out today, the
plan is to skip the first short entry on the SPX if it trades below 1245.96.
Then attempt to go long on an upside reversal of the number and then stop
yourself out and go short on the second entry below 1245.96. That plan won’t
change unless the dynamics on the monitor in front of you tell you to adjust. It
is essentially the same plan with the NDX but working off the 1826 low. When I
say the averages, you can play the SPYs or QQQs and –Â if you like to watch
paint dry — the DIAs, but the plan action if triggered, allows you to play any
related stocks that set up.

Stocks
Today

(September
Futures)

Fair Value

Buy

Sell

10.55

Â 11.80Â Â

Â 9.15Â Â

Also, in the Biotechs and
Semis — those are the two toys in the sandbox that the Generals have played
with the most over the last few weeks — there are no real setups on the daily
charts there but obviously some of them have pulled back to their breakout
points and some of them have pulled back to their 20-day EMAs, so check the
recent list of stocks in both those groups and have them on your intraday chart
focus.

Have a good trading day.

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

Monday’s NYSE
TICK chart

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Triple Witch Friday

BUY THE FEAR, SELL THE GREED

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