Kevin Haggerty
is a full-time professional trader who was head of trading for Fidelity Capital
Markets for seven years. Would you like Kevin to alert you of opportunities in
stocks, the SPYs, QQQQs (and more) for the next day's trading?
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Another key time period kicked in as week 377 (Fib) from the 3/24/00 SPX
1552.87 high saw the SPX go from the 1487.41 low on 6/8/07 to the 1532.91 close
on Friday. The leadership was energy with the OIH +6.1% and XLE +4.5% last week,
while the SPX was +1.6% from the 6/8 1507.67 close. The expectation was that
last week would close higher than the week ending 6/8 due to the short-term oversold
condition, triple-witch expiration, and week 377 time period. The market has
gone from the most oversold condition since March to the most overbought in 6
trading days (volume ratio and breadth, not momentum). There is no short-term
trading edge starting the week, based on those internals. However, any oversold
pullback will probably be small because there are just 10 trading days left for
the Generals in the quarter, and that is even more important now that it is the
6-month performance numbers in play. You can bet that they will manipulate
it to their advantage. I look at as "if they can, they will." The primary
negative to prevent the markup is more selling of $US Bonds by foreigners (or
lack of buying). It is not because of the spin doctors' reasoning that the U.S.
economy is taking off, because it "ain't."
The 3-day pop in the major indexes has left the market short-term overbought.
The 3-day MA of the volume ratio for this spurt is 79 and breadth +1672. NYSE
volume expanded to 2.0 billion shares on triple-witch Friday, with the volume
ratio 80 and breadth +1894. The TLT was +0.7% and was +1.6% for the 3 days on
the oversold bounce. Despite the 3-day spike, it was not that trader friendly,
because of the significant gap-up openings each day. On Wednesday, the SPX hit
1504.54 on the 10:40 AM bar, and the +1.0 Volatility Band zone. But the contra
move short was only to 1497.83 before the 2 PM spike under the cover of the Fed
Beige Book's "continued growth and lower inflation" statement. Thursday (SPX
+0.5%) and Friday (+0.6%) had big gap-up opening periods, but drifted lower into
the close each day. On Thursday the SPX hit its intraday high of 1526.45 on the
10:40 AM bar, and the contra move from this +1.0 Volatility Band went to 1519.30
before closing at 1522.98. Friday was even a bigger gap-up opening, as the SPX
hit the intraday high of 1538.71 on the "you guessed it" 10:45 AM bar. The +1.0
Volatility Band was 1538.05, and the contra short move was only to 1531.77
before closing at 1532.91.
Net-net, the move was excellent for the short-term oversold position trade in
a key time period, but not nearly as good for the day trader, other than the
contra move shorts each day from the +1.0 Volatility Band zone if you were
trading the SPX (futures or SPY). The key levels and strategy in play for the
SPX if the 1540.56 cycle high gets taken out are posted in the trading service,
and you can view them with a free trial.
Have a good trading day,
Kevin Haggerty
Check out Kevin's strategies and more in the
1st Hour Reversals Module,
Sequence Trading Module,
Trading With The Generals 2004 and the
1-2-3 Trading Module.
