Bull Cycle 4 Years Old Today and Counting

Commentary for 3/6/13

In the previous commentary I said that with the 1530.94 SPX high, weekly 5RSI at 83.93, and monthly 5 RSI at 80.36, the market wasn’t saying “buy me because the timing is good and I am cheap”. In addition to being O/B there was some monthly Pi symmetry in that 2/18/13 was 8.6 months from the 6/4/12 1267 Pi low, and 2/19/13 was the 1.618 Fib extension of the SPX 10/10/02-3/6/09 bear market lows.

However, the SPX only pulled back -3.0% in 5 TD`s from that 1530.94 high to the 50DEMA, instead of the 5-8% correction I expected, and made a new high at 1545.25 on 3/6/13 as I am writing this.

In the previous commentary I wrote: “I expect this to be a correction and not the end of the bull cycle within the secular bear market that began with the bull market 2000 top. The odds still favor the 1576 2007 high getting taken out before this bull cycle ends.”

The current bull cycle is 4 years old today, but the most significant Pi timing period is June, and then the first week in August. However, we are in an artificially sustained market driven by the Fed to quote Dick Fisher of the Dallas Fed. Regardless of what the pundits say it won`t be a happy ending, because the Fed cannot change the flow of capital from exiting the US market when it starts.

The day trading has been very positive during the 5 day decline and current advance because there was a change in levels, and that always means more opportunities and better travel range. Even on a day like yesterday when the major indexes went vertical in the opening period and hit their +2.0 Volatility Band levels by 11:00AM, but then flat lined the remainder of the session with no contra moves, there were other things to do in stocks from the Trading Service Focus List.

I have included just one example from yesterday, which includes the DIA [5 min chart], and UNP charts. Of course CNBC did nothing but babble about the INDU countdown and the new high.

However, UNP made new all-time highs on the opening bar above 138.53 as it hit 139.24, but then pulled back 3 bars to a signal bar 138.22 low. The entry above 138.60 to new highs was taken on the 9:50AM bar, and the trade exited below 139.56 following the 139.76 high, which was also the +1.0 VB.

UNP is a strong Trading Service Focus List stock, and you scroll that list all day looking for familiar strategy trading setups that fit your level of high probability-low stress day trading. There is always opportunity regardless of what the major indexes do, and that is why you should always trade both rather than being just an “index jockey”.

Click here to find full details on Kevin’s courses including Trading with the Generals with over 20 hours of professional market strategies. And for a free trial to Kevin’s daily trading service, click here.

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About Kevin Haggerty

From 1990 to 1997, Kevin Haggerty served as Senior Vice President for Equity Trading at Fidelity Capital Markets, Boston, a division of Fidelity Investments. He was responsible for all U.S. institutional Listed, OTC and Option trading in addition to all major Exchange Floor Executions. For a free trial to Kevin’s Daily Trading Report, please click here.

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