Wait For Second Time Through
A good day was had by all on Friday. We broke out of the 1305-1277 range early, and at about 3:00 PM ET the market exploded in price (but not really in volume) above the 50-day exponential moving average.
The S&P 500, OEX, NDX, and NYSE Composite all made wide-range bars and closed in the top of their ranges and above their respective 50-day moving averages. Volume was relatively light at 696 million, but who cares when you get the kind of price moves we saw Friday afternoon. All sectors were green, led by the strong moves in the major techs and Internets.
After a week of media hype, the bond players reacted like program traders, with the market moving from +15, to -5, to +15, to flat after the numbers were announced. The bottom line was the big April revision; very strange movement by the bond players.
We run into resistance on the S&P 500 at the 1328-1340 level. The Turk did his job on Thursday between 3:45-4:00 PM and then returned Friday for the 3:00-4:00 shuffle. The problem is we need the institutions to join in on the volume side if this is going to be more than a trap before a test of the 200-day moving average.
You must be careful with your entries today; stay away from the opening and play your entries on the second time through because there will be a lot of head fakes after yesterday’s price explosion. It wouldn’t be the worst idea to wait until after 10:00 to see which of your stocks are really trending. You can just as easily enter on a pullback of a strong, early trend taking place above the opening as you can 1/8 above the prior day’s close.
Target Stocks Of The Day  Right now it looks we’ll get tech follow-through. Some stocks that set up on Friday include Union Pacific [UNP>UNP], Southdown [SDW>SDW], Bausch & Lomb [BOL>BOL], General Dynamics [GD>GD], First Data [FDC>FDC], Lone Star [LCE>LCE], Schlumberger [SLB>SLB], and American International Group [AIG>AIG], if they come for some of the financials.
One name sitting in a long consolidation that’s in the news every day and which popped up on Friday with the rest of the techs is Microsoft [MSFT>MSFT]. Keep it in mind; it could be a good one to jump onto if it moves.
Program trading numbers  Buy: 3.10. Sell: 0.75. Fair Value: 1.60.
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.