The trading edge in this market

Kevin Haggerty is a full-time professional trader who was head of trading for Fidelity Capital Markets for seven years. Would you like Kevin to alert you of opportunities in stocks, the SPYs, QQQQs (and more) for the next day's trading? Click here for a free one-week trial to Kevin Haggerty's Professional Trading Service or call 888-484-8220 ext. 1.

The hype of earnings season is over and the SPX is locked in a trading range and has only closed above 1312 once, which was on Tuesday of this week. The daily range for the past 4 days is only 1% and that should be resolved next week. The short-term internals remain neutral, with the 4-day moving averages of the volume ratio 53 and breadth +291, despite the 1312.25 close yesterday. Oil prices ticked below $70 yesterday, with the CLM6 closing at 69.94, which is a key support level dating back to 8/30/05. The 50-day EMA is 69 and 200-day EMA 63.83. Last week, oil was going to $100 and this week some of the same empty suits are saying that it has peaked. I guess that is what makes markets.

At 8:30 AM we have the government's fraudulent job numbers, so the futures gang and hedge funds will have something to play with this morning. The only question is, which is more bogus: the jobs report or the government's current CPI calculations, which they say is now about +2.3%. Excuse me, oil and food is left out and they are +80% - 90% for oil and +10% for food. Housing is up double figures, as is insurance, not to mention double digit increases in healthcare and property taxes. Net net, the real-world inflation rate is probably between +10-15%, so maybe it should be no surprise that the U.S. dollar is selling off despite rising interest rates.

The SPX advance is with far fewer stocks in addition to negative divergences in some key indicators, so they need to spin hard to keep the rally going, especially if they don't have the energy stocks to carry the index should these stocks correct. Professionals who trade reversals on extended intraday volatility continue to excel, while the swing traders keep trying to avoid the daily land mines which are much more frequent now on any bit of news or brokerage hype, not to mention the hedge fund gaming of these situations. It is better in this environment for position traders to emphasize ETFs, HOLDRs and index proxies. Daytading the intraday volatility on the commodity-related stocks is currently the best game and edge in the casino.

Have a good trading day,

Kevin Haggerty