The Next Important SPY Time Date Is Approaching

Kevin Haggerty is the former head of trading for Fidelity Capital Markets. His column is intended for more advanced traders. If you would like to learn how Kevin trades, you can find more information here.

The month ended with a -0.8% day for the SPX ($SPX.X | Quote | Chart | News | PowerRating) and was +0.1% for the week. The Dow ($INDU | Quote | Chart | News | PowerRating) was -0.6% to 10,641 and -0.2% on the week. The (QQQQ | Quote | Chart | News | PowerRating) managed to finish -0.5% on the week, despite a -0.8% day on Friday. NYSE volume was 1.38 billion shares, the lowest volume since last Monday's 1.3 billion shares. The Generals did their thing for three days in succession with the SPX +0.2%, +0.5% and +0.6% prior to month-end's -0.8% on Friday. The regulators frown on any "aggressive mark-ups" the last day of the month, quarter, etc., so nobody was rushing in to take prices above Thursday's 1245.15 new rally high, and certainly not the hedge funds if there were no significant Generals' buy orders to front run on a mark-up. The weakest sectors last week were the financials, with the (TLT | Quote | Chart | News | PowerRating) -0.4% on the week along with the BKX, -1.5%, and XBD, -0.4%. The rest of the sectors finished on the green side led by the (OIH | Quote | Chart | News | PowerRating), +1.6%, RTH, +0.8%, and the (SMH | Quote | Chart | News | PowerRating), CYC and PPH, all about +0.4%.

The SPX hit the .618 retracement zone to 1553 with a 1245.15 intraday high vs. the 1254 actual .618 level, just +0.07% above 1245.15. Daytraders capitalized on the H&S/double top with short entry below 1243.22 which traded down to a 1234.18 low and close.

The SMH worked its way down from an opening-bar high of 37.42 to a 37.10 intraday low on the 12:30 p.m. ET, which set up an RST long entry above 37.13, which ran +1.1% to 37.55 before reversing on an RST short entry below 37.51 with entry on the 2:10 p.m. bar. This trade only declined to 37.33 before closing at 37.36. Both the RST long and short were clearly defined, by-the-book intraday entries with nothing subjective about them. Both RSTs were staring you in the face, so if you failed to take either one, look inside yourself for the reason because it's not the strategy's problem, it's yours.

We are now in the real dog month of summer as the August volume is generally to the low side and liquidity thin which can lead to some downside air pockets, especially as the SPX approaches the 1254 .618 retracement to 1553 with the 1245.15 intraday high and 1243.72 close. In fact, the August/September combination is probably worse than the month of August as there have been many selloffs into September and October.

The next primary Fibonacci time ratio for the (DIA | Quote | Chart | News | PowerRating)/(SPY | Quote | Chart | News | PowerRating), measured in trading days from the 10/25/04 97.27 low to the 04/20/05 99.89 low is the 1.618 ratio on 08/05, which is next Saturday, so your zone is +/- a couple of days on each side of next weekend.

This is being recorded Sunday night for Monday.

Have a good trading day,

Kevin Haggerty

P.S. I will be referring to some charts at www.thechartstore.com in the future.