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.
The SPX made a double bottom at 1140.78 on 5/25, and 1042.17 on 6/8. It has advanced +7.3% [low to high] in 6 days to Wednesday's 1118.74 intraday high. The rally has been on light volume, but the price action was technically significant in that the SPX took out the 1101 200DEMA and triple top resistance, as you can see on the chart.
The Euro crisis is the driver for the U.S. market right now. The Euro broke below support at 132.70, and then traded down to a 119.13 low, which correlated with the SPX decline from the 4/26 1219.80 high to the 6/8 double bottom at 1042.17 Since then, the Euro [XEU] has advanced 6 days on short covering to a 123.49 high as the SPX gained +7.3% for the same period, while the USD declined from 88.71 to 85.90 It is not about the earnings or any other "funny money" economic statistic that the empty suits on CNBC babble about all day.
The SPX position trade was taken on Tuesday with a day trading entry on a reversal of the 200DEMA, which was also price continuation to new intraday highs. The entry on the 5-minute chart was above 1101.20 and taken on the 10:30AM bar, which is a basic strategy entry in the Trading Service. The day trade was turned into a swing trade because there was a profit cushion as the SPX closed at 1115.23, so there was some wiggle room should there be a discount opening the following day.
If the EURO continues to work higher, the SPX initial resistance zones are the 1130.29 .50RT to 1219.80, and then the .618RT at 1151.41, in addition to the 01/19/10 1150.45 high. Both the 1150.45 and 1219.80 highs were in key price and time zones.
The SPX broke the down trend line, and also the 1101-1106 triple top resistance which included the 200DEMA, so it was obviously a technically positive trade, and it had to be taken rather than sitting around and rationalizing the fundamental negatives. It is just as easy to exit as it is to enter a trade, and then just wait for the next opportunity that might have a positive mathematical chance for success.
Have a good trading day!
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