Commodity sectors should remain the primary focus

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 closed at 1244.50, -0.08% on Friday and -0.5% for the week, while the $INDU was -0.3% to 10,989 and -0.2% on the week. Since the 1219.29 low on 6/14/06, the SPX has been unable to trade through the 1254 - 1263 resistance zone. The intraday highs have been in a range from 1251.92 - 1258.64. This is the last week of the June six-month performance report card for the Generals and their obvious incentive is to at least have positive six-month results for marketing purposes. The SPX closed 2005 at 1248.29 and most big mutual finds are quasi-index finds anyway, so they will attempt to close the SPX above 1248.29 this week. This Thursday, the Federal Reserve does its Fed funds hype dance, with the market already discounting a probable quarter-point hike. The TLT is -2.8% the past two weeks and the 10-year Treasury note closed the week yielding 5.22%, which is the highest in four years. Technology stocks and financials continue to underperform. The commodity sectors continue to find buyers at their 200-233-day EMA zones, while the XAU is +12% in eight days from its 377-day EMA, in conjunction with $GOLD (continuous contract-EOD) hitting its 575 - 550 initial support zone and 200-day EMA, which was the anticipated zone to get involved in on the long side. The low close was 555 on 6/14/06. The crude oil volatility continues to contract in the $WTIC (light crude continuous contract-EOD) with upside breakout > 73 and downside < 69. The 200-day EMA is 65.25.

Daytraders continue to prosper in the commodity sectors and that should remain the primary focus because the intraday volatility is excellent. Friday's APC/KMG merger news could accelerate the energy stock hype and give us even more volatility to trade with. The SPX daily range for the past six days has been contained between 1257.96 - 1237.17 (2.3%) and that has provided opportunities for daytraders both ways. For example, those of you who utilize my reversal strategies had a 1,2,3 double bottom SPX long entry above 1243 on Friday that ran to 1253 before reversing down to the 1244.50 close. You could have traded either the future or the SPY, which gave you an entry above 124.23, hit 125.30 and then declined, closing at 124.44. It is not the news that you trade, it is the reaction to the news that sets up the best trading opportunities.

Have a good trading day,

Kevin Haggerty