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 previous commentary of 10/10 (Strategies and Focus List Stocks), I
said that because the market is in a key time period and just below the key
price zone (1570-1580), in addition to being extended on a 3-month Standard
Deviation basis, coupled with negative momentum divergences, that the highest
probability was a downside reversal. The trading service had the anticipated
levels in advance (1573, 1578), and were prepared to take action. This was
rewarded yesterday with the lucky knife down in the SPX from 1576.09 (Volatility
Band zone) to 1546.72, which was the 816 ema (5-minute chart) and also a
Volatility Band zone. The SPX reversed to close at 1554.41. You can anticipate
and identify high probability zones, but you can't know the duration and extent
of a move.
The $INDU was +119 points, then reversed -238 points to a 13950 low, before
reversing +65 points to close at 14015. Got to love that volatility. NYSE volume
was 1.5 billion shares with the volume ratio 42 and breadth -757. There could be
several different institutional reasons for a futures-induced knife down like
yesterday, but it certainly wasn't the lame retail sales or JP Morgan downgrades
that the empty suits and media were espousing. The SPX was +15% in 38 days to
yesterday's 1576.09 intraday high, so most savvy traders did not get caught
surprised (or should not have), and it is my guess that there has been more than
the usual portfolio insurance selling of futures, or else buying of the
leveraged short ETF, like the SDS (SPX) by the institutions and hedge funds to
cover their tails during the historical weak month of October.
Those of you who have been reading this "ragsheet" for a period of time know
my strong feelings that the PPT has been very active in manipulating our market
for quite some time, and is putting the US market on the scale of some of the
3rd world manipulated markets. There was an excellent must-read article in the
New York Post yesterday (John Crudell) on the PPT and Federal Reserve regarding
the communication and market action around the 8/16 1370.60 SPX low, and 8/17
Fed rate announcement. You can access that article online through the business
section. Henry Paulson (Treasury Secretary) refuses to release any minutes of
the PPT meetings, despite increasing attempts to get them through the Freedom of
Information Act by people like John Crudell (NY Post) and Representative Ron
Paul. The PPT will do what it can to prevent any October meltdown, and if there
is any more significant selling pressure, they will make every attempt to
reverse it into year-end, with the help of the Generals' mark-up. Of course, the
2008 election is also a major factor that you have to consider where the PPT
will take significant action on any air pockets to the downside.
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.
Have a good trading day,
Kevin Haggerty
