Watch The CPI
Yesterday the techs took a well-deserved rest, with the NDX finishing down 39 points after being up 22 around 1:30 p.m. ET.
It was basically profit-taking after a 10% up move in six days. There wasn’t any unusual volume in the big techs–except for Cisco, which had risen 23% the last three weeks and traded to new highs yesterday before reversing to close in the bottom of its range. Many of the strong techs did the same after making four-to-five new daily highs in a row. So, these stocks probably won’t provide good entry opportunities for a couple days.
Just to keep yesterday’s Dow rally in perspective: The Blue Chip index finished up 107 points, with IBM, JP Morgan, and Hewlett Packard, accounting for 93, 35, and 17 points, respectively, of the Dow’s 145 Dow intraday gain, while the other 27 Dow stocks finished net down 38 on the day. The S&P managed to edge to new highs while the long bond finished up 1 5/32 to 119 21/32. What a difference a day makes. Oh, by the way, the CPI number is today. Let’s see if the futures traders can distinguish themselves once again.
Overall, volume was light, but with a positive up volume/down volume ratio–something to pay attention to during the day in terms of market dynamics.
Looking at things right now, many of the techs don’t set up unless they get a continuation pop this morning. Around 8:20 a.m. ET, the four major techs–MSFT, INTC, CSCO, AND WCOM–are all up, so we could get a “go” if the CPI number is good.
Target Stocks Of The Day  Continuations setups that look good today include Media One [UMG>UMG], MCI Worldcom [WCOM>WCOM], which broke out of a symmetrical triangle yesterday, Sprint [FON>FON], Circuit City [CC>CC] and Lehman [LEH>LEH].
Telmex [TMX>TMX] is a narrow-range pattern worth a look. A few cyclical stocks that set up yesterday are Dupont [DD>DD], Allied Signal [ALD>ALD], Caterpillar [CAT>CAT], and Goodyear [GT>GT]. Be careful with these cylicals; they’re reaching for their third move up since breaking above their 200-day moving averages in April. They’ve already had moves of 25-30% in a short time.
Program trading numbers  Buy: 7.10. Sell: 2.60. Fair Value: 4.80.
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.