Anticipation of Key Price and Time Zones

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? Click here for a free one-week trial to Kevin Haggerty's Professional Trading Service or call 888-484-8220 ext. 1.

In the 6/25/07 commentary "The Trading Strategy This Week," the trading plan was for a long bias this week, and to buy all weakness, especially in the morning. That is exactly what happened Monday-Wednesday, and it was 3 excellent trading days using the reversal strategies. It didn't matter that the SPX finished -0.3% on both Monday and Tuesday. The best day was Wednesday, because the SPX took out the 1487.41 swing point low, hitting an intraday low of 1484.18, and a reversal strategy got you in on the long side above 1487.03, or else the second strategy setup above 1488.18. The reversal entry ran to a 1506.80 intraday high before closing at 1506.35. Doesn't get much better than that for an intraday major reversal strategy trade. There was the seasonality bias this week, in addition to the fact that the SPX hit the short-term -2.0 Standard Deviation channel zone, and the low end of the 1540.56-1487.41 trading range. There were also many opportunities from the daily Above The Line (ATL) focus list, in addition to the $INDU, QQQQ and IWM.

Yesterday was an uneventful trading day, although the SPX did trade up to 1513.10 on the 1:50 PM bar, after a breakout of a Flip Top above 1506.54. After that, we had the FOMC statement, and the "keystone cops" showed up, despite the Fed saying basically nothing that we haven't heard already several times before. The SPX traded between 1514.84 on the 2:15 PM bar and 1505.88 on the 2:40 PM bar before finally closing at 1505.71 -.04%, as did the $INDU 13422 and QQQQ 47.52. NYSE volume was the lowest this week at 1.49 billion shares, with the volume ratio 54 and breadth +511. The 4 MA's of the internals are neutral, with the volume ratio 52 and breadth just +25, so the momentum is dead center into the last trading day of Q2. Although it has been excellent daytrading price action the first 3 days this week, it has been very disappointing to the bulls hoping to challenge the 1540.56 SPX bull cycle high made on 6/1/07, with the high close at 1539.18 on 6/4/07. The Double Top move from 1487.41 was to 1538.71 on 6/15/07, which was a key time period, as it was week 377 (Fib) from the 3/24/00 SPX 1552.87 last bull cycle top. This time period was anticipated in the Trading Service, as the SPX was also at the +2.0 Standard Deviation channel at the time, and short-term overbought with a negative divergence in momentum. There was symmetry of price and time, and a negative momentum divergence enhanced the probability of a reversal, which is what my "Core Framework" is all about.

Next week the market is closed on Wednesday, July 4, and because the week is broken up, there will be many money managers and traders taking some time off, so liquidity might be a bit thin. Next week also has some time symmetry, in addition to July 10. These are outlined in detail for the Trading Service commentary for Friday, and free trial users can access this information.

If the market rallies into this time period, I expect the next reversal to take out the 1487.41 and 1484.18 lows with the initial downside price zone at 1434-1430 and the 200-day ema at 1432.04.

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.