Kevin Haggerty is
the former head of trading for Fidelity Capital Markets. His column is
intended for more advanced traders. Kevin has trained thousands of traders
over the past decade. If you would like to be trained by him,
click here. or call 888-484-8220
ext. 1
NYSE volume dropped to 1.34 billion shares with the
SPY (SPY | news | PowerRating | PR Charts ) volume down
to just 32.3 million and QQQQ (QQQQ | news | PowerRating | PR Charts ) at 59.2 million. The
SPX (SPX | news | PowerRating | PR Charts )
advanced +0.4% to 1268.12 with the volume ratio at 66 and breadth ratio of +826.
The 4-day ratios are neutral at 54 (volume ratio) and breadth +69. So there is
more price room relative to short-term overbought or oversold conditions. The
stronger momentum phase stocks like Federal Express (FDX | news | PowerRating | PR Charts ),
Allergan (AGN | news | PowerRating | PR Charts ),
Burlington Northern (BNI | news | PowerRating | PR Charts ),
CSX (CSX | news | PowerRating | PR Charts ) and Gilead Sciences (GILD | news | PowerRating | PR Charts ) have
been pushed higher the past two days with other focus list stocks like
United
Health (UNH | news | PowerRating | PR Charts ), Express Scripts (ESRX | news | PowerRating | PR Charts ) and Brokers
Merrill Lynch (MER | news | PowerRating | PR Charts ),
Lehman Brothers (LEH | news | PowerRating | PR Charts ) and
Bear Stearns (BSC | news | PowerRating | PR Charts ) and
Morgan Stanley (MWD | news | PowerRating | PR Charts )
are in position to get marked higher so they remain a daytraders focus.
The actual rally is now 49 days old off the October 13 SPX 1168.20 low, and
+9.2% low to the 1275.80 high. The media and public wait with bated breath for
the much hyped last days in December and first 2 in January for more upside
prices. I assume you've gotten in before that. This corner looks at it from
other side of the hour glass and an opportunity to sell into any further advance
during this period. The Generals will probably offset any time/date reversals
into year-end with their mark-up. But I doubt they could do the same in the
January 2006 key time periods. The rally from October 25, 2004 to January 3,
2005 was 48 days. And a decline of 15 days before the SPX rallied again into the
March 7 highs. After a decline of 32 days to the April 20, 2005 1136.15 low,
there was a 73 day rally to 1245.86. This was followed by 50 days down into the
October 13, 2005 1168.20 low where we started this rally. You do the math and
look at the negative momentum divergences for the SPX and it is tough to make a
case for another 73 day rally (trading days) out to January 25.
Happy holidays to all,
Kevin
