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The SPX was -0.3%
on the week following the expiration and
closing at 1314.81. A new SPX wave 5 intraday high was made Thursday at
1328.53 but has yet to close above the 5/8/06 1326.70 high. That should happen
this week if the Generals mark prices up into the month/quarter end. The 1328.53
high was preceded by a negative 5 RSI divergence and the SPX made a 1310.94
intraday low on Friday. NYSE volume was at week's low on Friday at 1.43 billion
shares, with the volume ratio 35 and breadth -815. The 4 MA's of volume ratio
and breadth are 43 and -201.
The big leader last week was the TLT, which has
either gotten way ahead of itself of else the "crowd" is thinking hard landing
and Fed rate cuts. Crude oil traded below $60 again, so if that remains it is a
catalyst for the Generals' mark-up and a quick squeeze of the shorts.
Healthcare, brokers and defensive market issues have been leaders and will
certainly participate on any mark-up this week. Crude oil is very extended on a
standard deviation basis and the energy stocks very oversold, but they are
showing positive 5 RSI divergences so a short-term rally should be no surprise.
The futures are green early, and in addition to a quarter ending this week and a
9/26 - 9/27 key time period, expect volatility.
It is a trader's market only. The overall market
risk is extremely high and the expected return very low. There has been no pain
in this market yet and it is not a question of if, just when, and how much.
The cycle low timing zone is October 2006 - March 2007, based on actual numbers
for the past fourteen 4-year cycle lows.
Have a good trading day,
Kevin Haggerty
