Read Larry Connors' blog – Short Term Trading Strategies
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 SPX made a big 12:00 PM
mystery move last Monday from 1312 - 1332. After hitting an intraday
high of 1340.28 on Thursday it closed at 1335.69, +1.6% on the week after a
-0.3% on Friday. The $INDU, with all the new high media hype, closed at 11,679,
+1.5% for the week. The SPX has been in a range between 1340.28 - 1333.54 for
the last three days into the end of the quarter and that will be resolved this
week. The next significant zones for the SPX are 1349, 1367 and 1385. There is
minor support at 1326, 1315, 1304 and 1295. The Generals concluded an excellent
quarter-ending markup and now we will find out what stocks want to do in the
real world.
NYSE volume on Friday was the lowest of the week at 1.44 billion shares, with
the volume ratio 44 and breadth -599. The leadership once again was from energy,
as the OIH finished at +1.4% and the XLE +0.4%. They also led on the week at
+5.2% and +4.1%. We caught this energy rally right from the key price zone with
an oversold condition The OIH has advanced +9.1% from low (120.05) to high
(131.00) in four days before closing Friday at 129.85. The expected OIH
resistance was 130.00, and that has held for three days. There has been
significant short covering in addition to quarter-ending markup, as the $SPX and
$INDU composite climbed the ladder by themselves in a very selective advance.
The SPX and $INDU new highs have not yet been confirmed by the $TRAN, SP 400, SP
600, $RUT, $COMPX, QQQQ and $NYA.
The market has significant longer-term timing risk based on previous bull-cycle highs and four-year cycle lows, so it remains a trader's market with extreme risk for longer-term position holders. If there is no market top by 12/22/06, it will be the longest period since 11/27/80-8/25/87 without at least a 10% correction. All of this certainly makes one wonder what the Fed has done or is doing to keep this market on a high note through mid-term elections. It is getting a little too obvious watching the SPX rally after every significant potential crisis or fallout, which is the "bad news is good news" syndrome. No, it has nothing to do with the "market climbs a wall of worry" cliche. The immediate trading focus remains the energy sector for daytraders and right here some pullback is expected. After a couple of days for any new October money put to work, we should get a better handle on any other short-term sectors that deserve a focus and where traders can ring the register.
Have a good trading day,
Kevin Haggerty
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