Stocks

Trading Ideas

Short Term

Long Term

All Trading Ideas

Trading Lessons

Strategies

Courses

Interviews

Glossary

All Trading Lessons

Daily Stock Setups

Connors Daily Battle Plan

Haggerty Professional

Kaltbaum Intra-day Set-ups

Short Term PowerRatings

Long Term PowerRatings

TM Indicators

Trading News

Markets Updates

Technical Alerts

Breaking News

PowerRatings

Short Term

Long Term

Charts

Indicators

Stocks

Market Bias

Quotes

Markets

Stocks

Charts

Historical Data

Forex

Options

Trading Contests

Up or Down

Markets Worldwide

Day Trading

Stock Market Analysis

Stock Rating

View More Topics >>

View Trading Glossary >>

Timing is Everything

By Kevin Haggerty | TradingMarkets.com

Archives

Feedback

Email Article Link

Close X

It's December 1, the first day of the final month for the Generals to get the S&P 500 up 20% on the year. Airport Freddy showed up Tuesday, with the momentum stocks falling because the players had no fools left to sell them to, and some real sellers showed up. And that's when the markup ends. But only just temporarily. Sooner or later, price will be taken down to a level where the game can resume. Refer to your reference points from prior days' commentary. An example of Freddy's work for the last two days includes air pockets from high to low for the following stocks: CMGI [CMGI>CMGI] -15.4%; Amazon [AMZN>AMZN] -13.5%, Nokia [NOK>NOK] -10%, and AOL [AOL>AOL] -17% in three days. There are also many other techs which are off from 8% to 20% in the same timeframe. AOL is an example of when the bad guys are selling to the dumb guys -- the "us" in the world, you and I. AOL ran from 10 in October 1998 to 87 3/4 in April 1999, an all-time high. That bolstered many large mutual funds' performance for the first quarter of 1999. The stock then corrected geometrically by 62% to a low of 38 1/2 in August 1999. It then made a W-bottom, broke above both its 50- and 200-day exponential moving averages (EMAs), and also broke above its 6-month downtrend line. This started the momentum phase, along with the other institutional Internets, as I have mentioned in previous commentary. "Sooner or later, price will be taken down to a level where the game can resume." Tuesday, I had mentioned Gap Stores [GPS>GPS] GPS, which had the same geometric retracement as AOL to the 30-33 level, where good position trades could have been entered. GPS has rallied to 42 1/4 since, and above its 50- and 200-day exponential moving averages, so you're now looking for a pullback for entry and hope it has entered a momentum phase and not just a blip. AOL, on the other hand, has rallied from its retracement low of 38 1/2 to 85 3/4, which is just 2 points below its all-time high of 87 3/4 and Tuesday announced they're coming to market with over $1.25 billion in zero-coupon convertible notes. You get the picture: Timing is everything. The market tried to rally early Tuesday, as bonds moved to the upside. The Dow was up by almost 100 points by 10:45 a.m. ET, but the techs wouldn't let the S&P 500 cash come up for air as it could only manage a plus 1 or 2. The Nasdaq 100 was negative all day due to the techs. Even with bonds up 22 ticks around 2:00 p.m. ET, the S&P cash was minus 3 and the Dow had dropped down to +68, with the NDX off 30. For those of you keeping your market dynamics table shown in my five-day trading course, you already know this. But for you others, you are missing opportunity. Market dynamics and stock trade entry go hand in hand The S&P 500 must have been discounting Airport Freddy's late-afternoon appearance because the S&P got blown away from -3 at 2:00 p.m. ET to finish -19 on the day. And the Dow didn't escape, either, finishing -70 for a cute 170-point negative turnaround. They say the late-afternoon trend is the true one for the day. And it certainly showed that Tuesday. Also, Tuesday, you got excellent entries and multipoint profits in the OEXs, QQQs, and Spiders off of Tuesday's reference points. Don't be afraid to take the obvious when it's given to you on a platter. Simple is best. Program Trading NumbersBuySellFair Value5.102.903.90 Pattern Setups On the long side, I consider the patterns to be weak. On the short side, continuation entry on the QQQ's if you get it, and also on pullbacks to Monday's low of 152 5/8 and Tuesday's high of 153 3/8. Look for patterns on your 5-minute charts if you get pullbacks. The stock market dynamics must confirm your potential entry. Long side patterns: Fannie Mae [FNM>FNM], only if it crosses its 50- and 200-day EMA; American Express [AXP>AXP], above Monday's high; Lehman Brothers [LEH>LEH] or Morgan Stanley [MWD>MWD] (that's the first entry -- whichever one you get, but not both); Intel [INTC>INTC], if it crosses above its 50-day EMA of 77.09 (use a tight stop); and Tandy [TAN>TAN], if it trades above Monday's high. These are weaker patterns than usual and if they take them down early Wednesday, you're going to see trap doors and opening reversals if they decide to run that counter rally in the morning. Have a good trading day.

>> See more articles by Kevin Haggerty

Related Articles

More Related Articles >>

PREMIER SPONSORED LINKS

TRADE CENTER

The TradingMarkets Directory

Stocks

Options

Forex

E-mini/Futures

How to Trade

Tools

PowerRatings

Trading Contests

Premium Subscription Services

Short Term PowerRatings

Free Trial

Long Term PowerRatings

Free Trial

TradingMarkets Subscription

Free Trial

Daily Battle Plan

Free Trial

Gary Kaltbaum - Intraday Breaking Alerts

Free Trial

Kevin Haggerty Professional Trading Service

Free Trial

RELATED SITES

Please call 1-213-955-5858 ext. 1

......

All analyst commentary provided on TradingMarkets.com is provided for educational purposes only. The analysts and employees or affiliates of TradingMarkets.com may hold positions in the stocks or industries discussed here. This information is NOT a recommendation or solicitation to buy or sell any securities. Your use of this and all information contained on TradingMarkets.com is governed by the Terms and Conditions of Use. Please click the link to view those terms. Follow this link to read our Editorial Policy.