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 third quarter markup by
the Generals was accelerated on Monday with the 12:00 p.m. explosion
from SPX 1314 to 1329, before closing at 1326. The Noon hour was a perfect time
as it was quiet, the market action was soft to the downside and the intraday
dynamics were neutral to down. There was really nothing going on at the time and
no news in play. There was no problem taking the futures up and accelerating the
buy programs, which meant fewer shares of specific stocks had to be bought to
accelerate price. Even the empty suits on TV were bewildered and couldn't attach
a news bite or reason for the sudden explosion. I guess that's a first for them.
This move accelerated some short covering. The SPX is +3.4% in 13 days from a
1292 low (9/7/06), closing yesterday at 1336.34, +0.8%, as did the $INDU at a
new closing high of 11,669. There was an SPX +7-point program move starting on
that ever-familiar 10 a.m. bar, then went sideways until a small push up in the
last half hour to the 1336 close. About 75% of the advance starting from the
Monday implosion was program initiated. Upstairs trading desks were sitting
around watching the price advance but doing very little institutional working
order business relative to the extent of the price move. It is also interesting
to note that with midterm elections only a few weeks away, just like magic crude
oil and pump prices have declined sharply on top of new price highs on the SPX.
We caught the sharp bounce in the energy sector starting Monday (see
9/25/06 commentary). The OIH popped, +6.0% from 120.05 to 127.39 yesterday,
closing at 126.46. There is major resistance at 130. The OIH was at the .382
retracement (120.25) to the 40.21 (9/2001) low and 119.78 Fib extension of the
last leg up from 130.47 - 169.75. The low on Monday was 120.05, with the one-day
-1.5 volatility band at 119.90. There was a Trap Door entry above 120.30. The
other symmetry that made it a key price zone is that the OIH was extended to the
-2.0 standard deviation zone on a one-year time period. In addition to that,
there was a positive 5 RSI divergence from a very oversold condition. In my
trading service this zone was anticipated in advance and traders were able to
catch most of the move. There were bigger gains in many of the OIH and XLE
component stocks.
The Generals have done a blatant good job so far on
the markup and it should hold up through month-end.
Have a good trading day,
Kevin Haggerty
