Read Larry Connors' blog – Short Term Trading Strategies
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. For a free trial to Kevin’s Daily Trading Report, please click here.
In the last commentary for 12/30/08 I said the market was ST-O/S on a momentum basis after the 857.07 low on Monday, which was at the bottom of 15 day trading range (919-851) at the time. I said the next 5 days had an upside bias so it should not be a surprise if the next move was up. I also said that the resolution of the range will be the next market catalyst. The SPX broke out of a 17 day range last Friday and hit a 934.73 high, before closing at 931.80 (+3.2%).
Yesterday the SPX finished -0.5% to 927.45 on NYSE volume of 1.3 bill shs with the Volume Ratio 54 and breadth at +1035 which was a small positive divergence to the index decline in both the SPX and INDU. As of the close on Friday, after the SPX +3.2% gain, the 4MA's of the internals were extremely ST-O/B, with the VR 74, and breadth +1367, while the 5RSI was 81.
The SPX hit its first key Fib zone yesterday, with the 936.63 intraday high, versus 938 which is the 0.236RT. Members of the trading service capitalized on two defined strategies yesterday in the SPX. The first was the pullback to the trading range 919 high as it made a 919.53 low on the 9:55 AM bar which was a valid doji signal bar at the range high support level. The trade ran to a high of 933.50 before it reversed and went sideways until it made a new high of 936.63 on the 2:05 PM bar. This set up the RST short at the 0.236 of the 938 zone, and after entry below 934.46, it declined to 921.52 before closing at 927.47. It was a profitable day utilizing the 1st hour Trap Door reversal strategy and than the expanding volatility RST strategy. There was support symmetry for the TD, and Fib resistance for the RST. These strategies and more can be studied with a free trial to the Trading Service.
The USD is expected to be strong early in 2009 and weak later in the year due to obvious inflationary action taken by the Government and more of it proposed by the new administration. The USD is +7.1% over the last 10 days while the TLT has declined to -8.6% for the same period as the SPX has rallied. The Treasury market went to extremes due to the “panic of 2008”, and there has been some swapping out of bonds into stocks which has fueled the rally. At the same time, the energy sector has advanced 6 straight days as crude oil ($WTIC) has advanced +39% from 35.13 to a 48.81 close yesterday (+5.3), accelerated by the military action in Gaza.
The SPX futures are +7.25 as I complete this commentary, and crude oil is trading over 50, so if there is an early push it will set up some short intraday opportunities in the major indexes.
Have a good trading day!
Click here to find full details on Kevin's courses including Trading with the Generals with over 20 hours of professional market strategies. And for a free trial to Kevin’s daily trading service, click here.
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