Market Symmetry and Volatility in USO and SPX

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 initial 1387-1403 resistance anticipated in the previous commentary (2/26) held up the last three days with highs of 1387, 1388, and 1378 yesterday. Bernanke painted a bleak picture is his testimony to congress this week, on top of the accelerating crude oil, gold and other commodity prices, not to mention runaway food prices thanks to what is becoming the great "ethanol hoax" The derivative meltdown and credit crunch is the Feds major problem, and you will probably see a significant bail out or two by the Fed before there is a turn for the better. It will be more of the same, write the inventory down, but still no buyers for the securities.

The energy move in the last 14 days is vertical, as the USO (USO | Quote | Chart | News | PowerRating) is +19.2% from 68.57 to the 81.74 high yesterday. New cycle highs were made on the 4 month range B/O above 79.09 Two weeks ago, when the USO (USO | Quote | Chart | News | PowerRating) was at 68.57 the "pundits" were telling you that crude oil was heading south to the $65-$70 zone because of the economic slowdown, and now they are touting the current advance as the next big leg of the commodity cycle, and "they" are jumping into the commodity related sectors again like "pigs feeding at the trough", and you know how that kind of bubble emotion will end.

The daily volatility on the news reactions continues to benefit day traders using the specific strategies that I mentioned in the 2/26/07 commentary. Despite the increased volatility, the major indexes continue to trade with significant price and time symmetry, so we have been able to maximize key reversals on both a short term and intraday basis.

Today is month end, and the $SPX futures are -15 points at 8:00AM, so the most likely initial trading opportunities for day traders will be Trap Doors with Fib (1350) and volatility band symmetry (1352, 1347, 1344, 1336). My overall market outlook hasn't changed, which is that it remains a bear market, and the cycle low will be below 1270. A rally to the 1420-1445 zone would be a high probability position short opportunity. However, the initial short zone remains 1387-1407, which includes the Head & Shoulders neckline.

The next commentary is Tuesday 3-3-08

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.