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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 major indexes didn't give daytraders much to take advantage of yesterday, as the indexes traded pretty much sideways for the whole day. In fact, the SPX finished unchanged at 1447.16, while the $INDU was +0.1% to 13057 and the QQQQ +0.4%. The sector leadership these first 2 days of 2008 is where we left off in 2007. The leadership so far is gold, energy and commodity stocks, while the downside the first 2 days is familiar, and led by financials, retail, semis and transportation stocks. The $HUI is +9.6% to start the year, and the OIH +2.4% and XLE +1.5%. That compares to the SMH at -5.2%, $XBD -3.5%, $TRAN -3.4%, $BKX -2.8%, and XLY (consumer discretionary) -2.6%. The major indexes are also red for 2008 so far, with the SPX -1.4%, $INDU -1.6% and QQQQ -1.1%.
The same housing, writedown, tighter credit and weak economic news has carried over, and the commodity sectors remain strong across the board with energy, precious metals, industrial metals and also agriculture, as the "great ethanol hoax" continues to drive food prices through the roof for little, if any, noticeable gain. Net-net, an inflationary/recessionary scenario is obviously not a positive for the equity market starting 2008. Elephants can't hide, and we will watch the price and volume action of the major index stocks to identify any swing in sector sentiment by the Generals. There is no evidence that the Generals have turned the hour-glass over and started buying the weak sectors from 2007. This all means that the daytrading focus on the continuing strong sectors remains the same until the market dictates otherwise.
NYSE volume was 1.3 billion shares yesterday, with the volume ratio 41 and breadth +218. Today through all of next week is a key time zone with symmetry, so we should expect volatility and/or a trend change, which can also be an acceleration of the current downtrend, as well as a reversal. It is not a key price zone for the major indexes yet, and the SPX remains in the downward channel, and the short-term internals haven't reached the oversold zone yet, so there is no strong bias either way into this key time period starting today. However, there is an ominous head and shoulders neckline at the 1406.70 low close, and that is the downside magnet for the bears.
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 and Happy New Year,
Kevin Haggerty
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