Triple Witch Week

• March 11, 2002
• Kevin Haggerty

Friday
was a gap up early in
reaction to an economic report, then a drift down for the rest of the session.
The intraday high for the SPX
(
$SPX.X |
Quote |
Chart |
News |
PowerRating) was before 11:00 a.m. at 1172.76,
then it sold down into the last-hour intraday low of 1157.54 before an eight-bar
rally into the close of 1164.31. The SPX continues to hang around the 233-day
EMA. The SPX ended +0.6%, the Dow
(
$INDU |
Quote |
Chart |
News |
PowerRating) +0.4%, while the techs
outperformed the basics, with the NDX 100
(
$NDX.X |
Quote |
Chart |
News |
PowerRating) +3.2%, and +8.1% in the
last five days. The long
(
XLK |
Quote |
Chart |
News |
PowerRating) and short
(
XLB |
Quote |
Chart |
News |
PowerRating) spread made another nice
move as techs outperformed basics. All three major indices finished positive
relative to their intraday trend indicators.

NYSE volume was again
above average at 1.4 billion, volume ratio positive at 61, and breadth neutral
at +167. The Nasdaq, with the techs leading, traded 2 billion shares, and the
positive volume surge accompanied the price gain. The volume ratio was strong at
83, with breadth good at +970. The semis completed a +12% week by advancing
4.4%. Regardless of the mix of new money, short covering, or whatever else,
there has been a significant price/volume surge, and this favors more advance
with shallow declines over the next couple of weeks. You should follow the
intraday trends for short entries in the index proxies as we are short-term
overbought and ripe for a quick down move.

The
(
QQQ |
Quote |
Chart |
News |
PowerRating)s are now up
six consecutive days. This week will have lots of two-way action, as it is a
Triple Witch option expiration, and that usually means more Slim Jims and
volatility band trades than normal. Futures and options will accelerate a market
in the direction it’s going, and that’s why you get an increase in volatility
during expiration week.

The SPX closed at
1164.31, so your immediate focus is the 200-day EMA below at 1157.64 and the
233-day EMA at 1168.40. The eight-period EMA on the 60-minute chart is 1163.83.
The eight-period moving average of the high on the 60-minute chart is 1168.40,
so you know where upside acceleration takes place. On your 60-minute chart, the
SPX is in a five-bar pullback to its eight-period EMA of 1163.83.

Stocks
Today

There are not very many
compelling setups unless you like to play stocks up five to seven straight days.
No interest here in doing that. I would rather focus on the intraday patterns
for the index and sector proxies along with any Fib retracements in trending
stocks, up or down. If you’re long, you’re riding them, but don’t chase them
here on the daily chart.

Some that do set up on
the daily charts are
(
ALLY |
Quote |
Chart |
News |
PowerRating),
(
NVDA |
Quote |
Chart |
News |
PowerRating),
(
KRON |
Quote |
Chart |
News |
PowerRating),
(
BLL |
Quote |
Chart |
News |
PowerRating),
(
ELBO |
Quote |
Chart |
News |
PowerRating),
(
WMT |
Quote |
Chart |
News |
PowerRating),
(
SYY |
Quote |
Chart |
News |
PowerRating) and
(
LMT |
Quote |
Chart |
News |
PowerRating).

Have a good trading day.

Five-minute chart of
Friday’s SPX with 8-, 20-,
60- and 260-period
EMAs

Five-minute chart of
Friday’s NYSE TICKS