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The major indexes were red on Friday, with the SPX closing at 1422.75 and -0.4% on the week. The other indexes were also down on the week, with the $INDU -0.6% to 12487, QQQQ -1.4% to 43.57 and $COMPX -0.8% to 2435. Last week's SPX low was 1416.96, and that is where daytraders start the focus today. If that low gets taken out on continuation weakness, then it will set up the RST reversal strategy, and if it doesn't, the 1-2-3 higher bottom will be in play, as the trendline from 1440.69- 1416.96 has been broken. The -1.0 VB level today for the SPX is 1414.61, -1.28 VB 1412.49, -1.5 VB 1410.82, and -2.0 VB 1407.03. The 50 dema is 1409.77, with minor support at 1404. On the upside, the 20 dema is 1423.53. Once you have anticipated key levels and potential strategy setups, you are ready to sit back and take whatever the SPX gives you within that anticipated framework. The S&P futures at 7:15 AM as I do this are quiet at -1.0.

The primary daily chart trend remains up, so the bias is for the generals to mark-up their major holdings, or prevent any decline in these last 3 days of the month, and then maybe put some new money to work the first few days of February. With so many new ETFs now in the market, it has definitely been a factor in prolonging the current bull cycle, as they continually buy the same big-cap stocks for the trusts, and this is also a factor in month-end. I don't know how to evaluate this effect yet, but I do know it is a new significant factor for random price movement, along with the programs.

This week is full of economic reports following the consumer confidence number today, so the artificial futures "games" played with these reports will give daytraders the necessary volatility to get involved. In fact, volatility expanded last week, with the SPX weekly range at 23.7 points, versus 11 the previous week. The average daily range expanded to 12.3 points versus just 6.8 for the week ending 01/19/07. (see 01/24/07 commentary) Contracting and expanding volatility is a very important tenet in the "Core Framework" for my strategies in all time periods.

I expect the SPX to close Friday higher than last week.

Have a good trading day,
Kevin Haggerty

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.