Watch For Quick Pullback
Friday was light but last week proved to be very successful for the institutions, with the S&P 500 rallying from +7% year-to-date on June 25 to +11.3% on June 30, picking up 4.3% the last three days of the quarter. Adding the 1.4% gain from Thursday and Friday, the S&P is up 12.7% on the year.
Going forward, it should be easy to see how important it is to stay in front of the key institutional stocks as they become increasingly volatile due to programs, momentum players, and the relentless push to keep the averages up.
This week, be on the watch for a quick downside reversal after the six consecutive up days on the Dow (a 605-point rally), and five straight up days on the S&P. Take intra-day trades if you get them, but be ready to bail out and stay disciplined with your stops. Just a reminder: Check the site and you’ll see that both the CVR III and the TradingMarkets.com Momentum Index indicator are both pointing down.
Target Stocks Of The Day I’ll give a few extra stocks to get into things after the holiday. If we get follow-through, watch the following patterns: Conexant [CNXT>CNXT], Tricon Global Restaurants [YUM>YUM], Earthlink [ELNK>ELNK], which you’ll get a chance to play if they run it to new highs or pull it back, Tellabs [TLAB>TLAB], Harley-Davidson [HDI>HDI], Sun Microsystems [SUNW>SUNW], Nextlink [NXLK>NXLK], Texas Instruments [TXN>TXN], Schwab [SCH>SCH], Dayton Hudson [DH>DH], Best Buy [BBY>BBY] and America Online [AOL>AOL], which has formed a head-and-shoulders at its 50-day exponential moving average. It’s up on news stories; if you get a pattern during the day, get on board–it will have a lot of momentum.
| Program Trading Numbers | ||
| Buy | Sell | Fair Value |
| 12.85 | 9.15 | 11.00 |
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.