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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After early declines on both Wednesday and Thursday, the SPX and $INDU had
magic reversals, both of which started in the frequent 2:15-2:20 PM program
period each day. The SPX reversed +28 points, and the $INDU +205 points from
their intraday lows. Yesterday it was +18 and +154 points. On Wednesday, the SPX
finished only -0.2%, closing at 1515.88 off the 1489.56 low, while the volume
ratio was negative at just 36 and breadth -912. The $INDU, which reversed +205
points, closed down only 1 point to 13675. I would say that the PPT had a very
aggressive afternoon, in what has become the United States banana republic stock
market. Yesterday was the same deal, except the internals were neutral, with the
volume ratio 49 and breadth -93. NYSE volume finished at 1.6 billion shares. I
don't want to throw the PPT completely under the bus, because there are some
well-known very large mutual funds with October fiscal year ends, so with only a
few days left in the month, they probably made a pre-emptive move.
This week has been heavy with news, with the Merrill Lynch write-down (more
to come), crude oil setting a record by trading over $92 on the NYME yesterday,
and the $US Dollar declining once again, with foreign sellers of US equities for
the first time since 1998. The current liquidity squeeze means that the Fed will
cut rates again, so the $US Dollar will decline, gold will rise, in addition to
commodities, and there will be more pressure on the equity markets, which will
force the PPT to get even more aggressive, to hold their finger in the dyke. The
SPX price levels right now are decoupled from the economic and financial
realities.
The semis have imploded since 10/11 to join the financials on the downside,
and there are double-digit declines for many big cap stocks reporting earnings
with lower guidance for 2008. This will be, and now is, a recession that won't
be declared by the Bureau of Labor Statistics, because they will just adjust and
revise the numbers, so it doesn't fit a formal definition of a recession. That
of course will be the spin by the media also. There is a lot more blood to be
exposed in the mortgage securities market, and the related structural
derivatives, so that is obviously not a positive going forward for the markets.
Not to mention the unhappy homeowners, as they watch their equity disappear by
the month. Don't worry folks, the "weasel of economic death" Mr. Charles Rangel,
the ranking socialist in Congress, promises the biggest tax overhaul in history.
I have a few substitute words for overhaul, but it would not be appropriate in
this rag sheet.
Our emphasis in daytrading the extended and contracted volatility patterns in
the major indexes and ETFs has been spot on, and it avoids the emotional trading
decisions that get triggered by the spin from the empty suits on CNBC every time
a report comes out. The stock emphasis has been for a long time, and is now, the
energy, commodity and multinational stocks, in addition to some selected
technology stocks since the positive seasonality started in July. Any
significant rally from here will be a chance to put on advantageous major index
short positions.
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
