Today's initial downside alert

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 SPX entered the March 6,7,8 time zone with a 1297.33 intraday high on Friday, declining in the afternoon to the 1287.23 close. The first anticipated price zone was 1271 - 1270 and that was hit yesterday, with the 1271.16 - 1271.11 intraday double bottoms. The -1.0 volatility band yesterday was 1270.60 and there was a valid entry trade. The better index trade yesterday was the DIA RST buy setup. Gold, energy and semis led the downside, with the XAU and OIH each -0.3% and the SMH -1.9%. All three are short-term oversold. Some defensive issues finished green with the XLP +0.7%.

The SPX has declined 4 days in succession, but only -1.3%. The 7:30 a.m. S&P futures are -3.0 points and the Dow -21, so early weakness can lead to an upside contra move in the first hour. The SPY intraday low yesterday was 127.50, which is also the 50 DEMA and it closed at 127.97, so you know where the initial downside alert is. Yesterday's SPX low was also the .618 retracement to the 02/07 1253.61 low, so there is ample zone symmetry. In spite of the SPX 4-day advance, it is not quite in the ST-OS condition.

NYSE volume has remained constant and was 1.65 billion shares yesterday but the volume ratio was 28 and breadth -1530, which follows Monday's 33 and -1287. One more down day will put the 4 MAs and RSI (now 33.1) into the ST-OS. Remember, it takes plenty of cash to move the market up but it doesn't need an increase in volume to take it down when the Generals just sit it out.

Have a good trading day,

Kevin Haggerty