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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.
The equity and Fed funds markets have been discounting a rate cut, as has the $US Dollar, which continues to make new lows, with the $USD Index closing yesterday at 76.74. Crude oil hit record highs (93.80) this week, and the COMEX December gold futures hit 798.30, which is the highest since 1980. There was profit taking yesterday as crude oil has approached the $100 target number, and Goldman Sachs made a call to start taking some energy money off the table. The SPX was -0.7% to 1531.02, while the OIH was -4.1%, XLE -3.4% and USO -4.1%. Gold stocks also declined, with the $HUI -2.2%. NYSE volume was light at 1.2 billion shares, with the volume ratio weak at 31 and breadth -812. The price action in the major indexes was not beneficial to daytraders yesterday, but the volatility in the energy stocks did provide opportunity, as did some selected technology stocks. The QQQQ was the only major index that finished on the plus side, at +0.2%, and is +22.2% since 8/16/07, while the SPX is +11.7% for the same period.
The equity market continues to hold up, with the help of the PPT I'm sure, ignoring the declining dollar and inflationary consequences, as crude oil and gold hit record highs, as did many other commodities. The Fed's capitulation to cutting rates indicates that the slowing economy, liquidity, credit and housing problems outweigh the inflationary consequences of the dollar. The mortgage securities market has not found a trading level yet, and there will be more significant write-downs going forward, until that changes. Essentially, there is no market.
Daytraders continue to prosper with the increase in gap openings, due to both the pre-market futures, and now the electronic opening process, which makes the 1st Hour trading strategies even more successful. With the expansion in volatility, traders are getting more extended Standard Deviation moves to trade against, which is always a high probability strategy. Today is month-end, and the "market" expects a rate cut, so the 9/28/07 1526.75 SPX close will most likely hold up, and October will finish positive for the Generals. The next key time period is mid-November, and if the SPX is declining into that period, it will set up a stronger year-end markup by the Generals.
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
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