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. Mr. Haggerty is a co-founder of Tradingmarkets.com and is the founder of www.KevinHaggerty.com.
The $SPX made a double bottom (1407, 1406.94) in the first 45 minutes of trading, just above the 1406.71 200DEMA and 1406 H&S neckline resistance and the trend went up.
The index popped +6.4 points in the last 20 minutes (MOC session) and hit 1424.40 before closing at 1423.57 (+1.1%) so there was probably some option expiration program activity. Gold and energy stocks were the leaders with the $HUI +3.9% and OIH +3.3% followed by the semis with the SMH +2.1%.
NYSE volume was light at 1.19 billion shares, with the volume ratio 79 and breadth +1261. The 4 day MA's of the VR (67) and breadth (+828) hit the ST-O/B zone for the first time since the third week in April, which indicates how price has advanced on weak internals. The new high rally close makes the 200DEMA zone the initial pullback support level, and next resistance is the 1454 .618RT to 1576 from 1257.
This is an option expiration week, so the program price action can reverse quickly next week, which would certainly be a head fake.
The energy sector stocks had great travel range (volatility) yesterday, as did crude oil, and that meant trading opportunity, especially for those traders familiar with my strategies, and how to use the Volatility Bands that are posted each day in the trading service. The XLE chart shows the two RST setups yesterday, with the 5 point short entry below 86, which was also the +1.0 VB level , and the 6 point long entry above 84.57 which formed after the 84.38 low was taken out. Suffice it to say, the RST traders had a profitable day. You can see how this strategy is utilized by taking a free trial to the trading service and checking the archives of commentaries and actual trades (call the Sales department at 888-484-8220 Ext. 1) The RST strategy can be used in all markets and time frames.
The credit crisis and housing deflation continues, while the Fed's main objective is to keep the financial institutions solvent. The economy continues to slow with rising inflation, regardless of the bogus economic numbers put out by the government, and spin by Treasury Secretary H. Paulson. This Congress has passed a farm bill that will perpetuate the Ethanol “Hoax” and keep food prices rising, and in June will probably pass a climate cap bill that is a lock to push gas prices even higher, not to mention their purposed tax increases, which is not what you would call timely in light of the current derivative meltdown and sinking consumer. The spread between reality and the market advance is not sustainable, and I bet the market will flinch first.
Have a good trading day!
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.
