Turk?

March 2, 2001
Kevin Haggerty

Yesterday
was a daytrader’s moon shot from
significant alert zones in both the NDX and SPX. Whether it was the Turk or just
some Generals trying to run an oversold and unloved market, the prepared trader
reaped the benefits. The .786 zone for the NDX is +/- small around 1866, and for
the SPX, the number in play is the .618 zone at 1208.

The Nasdaq 100
(
NDX |
Quote |
Chart |
News |
PowerRating)
hit an intraday low of 1838, then gave you a 1,2,3 close entry above 1847 and a
normal 1,2,3 entry above 1852. Both entries cleared the 8-period moving average
of the high. You knew the alert zone in advance, you got a defined reversal
pattern, and then we got lucky with the extent of the move. The NDX rallied 7.1%
low to high.Â

As you know, you can’t get
lucky if you debate it and don’t trade it. FYI, the 1838 low was exactly 61.8%
down from the 4816 March high. The
S&P 500
(
SPX |
Quote |
Chart |
News |
PowerRating) had an intraday low of 1214.50, almost right on the 1208
.618 number. Remember: You’re thinking “zone” of possible action, not
exact numbers. Both the SPX and NDX had positive divergences prior to giving you
reversal pattern entry.Â

Whether Greenspan sent in
the Turk in lieu of a rate cut or not, the Net, Net, Net for position players is
that it was another new low day with a close in the top of the range, with
both the SPX and NDX still trading below all of the 10-. 20-, 50- and 200-day
declining EMAs. Nothing even
starts to get interesting for position players until the SPX, at a minimum, can
reverse the 12/21 1254 low and the NDX does the same to the 2087 Jan. 3 low.

If the NDX just rallies
back to its declining 50-day EMA of 2372, which will leave it still looking
chart-ugly, that is a +21% move from the 1968 close yesterday, and +29% from the
1838 low, which would be consistent with prior rallies off alert zones.Â

After the close last night,
we got our newest media bad boy hype, with
(
ORCL |
Quote |
Chart |
News |
PowerRating) giving the third quarter
“missed again” dance. Of course, the stock is already down 60% from
its 46.5 9/1/00 high to yesterday’s 18.75 intraday low. It closed at 21 5/16 in
the Turk’s rally. A 1.618
extension move of its recent rally to 35 takes the stock down to 13, just above
the 12 breakout level in October, 1999. Ashes to ashes and dust to dust, I
guess. Welcome to the real world to the new generation of investors that have
only known “up.”

Probably the most positive
thing that can happen today is for the professionals to discount any ORCL hype
selling from the retail, and then we catch a glimpse of any lurking Generals in
a buying mode — or was it strictly the Turk?

(March
Futures)

Fair Value

Buy

Sell

2.30

3.75Â

Â .70Â

Pattern
Setups

In the S&P 500
yesterday, out of the top 25 stocks, 11 were Semis and most of them were up on
more than their 30 days average volume. If they play the Semi game today, take a
pass on the first entry above yesterday’s highs and wait for a second entry or a
pullback setup.Â

Remember,
smaller size and no first entry with the Chosen Ones.

On
the short side, I’d stay all over the
(
QQQ |
Quote |
Chart |
News |
PowerRating)s — it’s easier to read the
market than stocks. It will give you good entry if we rally and start to
hesitate and start breaking down below moving averages.Â

In
any of the Chosen Ones, if for any reason they were to gap up and open up and
then reverse yesterday’s highs, you can probably look to short some of those.

Â Have a good trading
day.

Turk?

BUY THE FEAR, SELL THE GREED

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