Wading Through The Hype

Despite jawboning by another regional Fed governor, inflation worries took hold of the market yesterday. I guess we’ll just alternate days of misinformation.

The long bond got whacked to the 5.71 yield level and the Dow, S&P and NASDAQ all sold off in a solid down-trending day, with no magic buyer showing up after 3:00 p.m. to bail us out.

After the first Dow close over 10,000 on March 29, the market gave back 221 points in the next two days, so yesterday wasn’t really unusual–but it was a little disappointing after the last hour move to close above 11,000 (probably too much program buying and not enough real buying).

In this choppy environment, you have to be very careful with your intraday or short-term stock selection. There’s too much media hype–too much emphasis on things that don’t mean anything in the short-term–creating a tremendous amount of noise.

Target Stocks Of The Day  Narrow-range patterns that should only be taken in the direction of the trend include Nextlink [NXLK>NXLK], Sotheby’s [BID>BID], and Hewlett Packard [HWP>HWP]. Consolidations near highs that could accelerate if we have an up day: Rockwell [ROK>ROK], Tandy [TAN>TAN], Unocal [UCL>UCL], and Wells Fargo [WFC>WFC].

Intraday patterns on stocks that have pulled back to their 50-day moving averages include America Online [AOL>AOL], PSINet [PSIX>PSIX] and Cisco [CSCO>CSCO] You’ll know when they come for these: They’ll form up, there will be some kind of consolidation, and they’ll start to trade on the offer side.

A few good short-side patterns showed up yesterday, including Dayton Hudson [DH>DH], American International [AIG>AIG], and Wal Mart [WMT>WMT] and Home Depot [HD>HD], which both closed below their 10- and 50-day moving averages on good volume.

Program trading numbers  Buy: 8.40. Sell: 3.70. Fair Value: 6.02.

Editor’s note: If you want to learn more about Kevin Haggerty’s trading strategies, click on the link below to go to his new series of tutorial articles.