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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.
The thin electronic futures trading and foreign markets meltdown gave us an SPX futures limit down day (60 pts) on Friday, and the SPX made its intraday low on the opening bar at 853, but it bounced to 896 before closing at 877. Yesterday the SPX rallied from 856 on the 9:35 A.M. bar to 894 on the 1:45 P.M. bar, and then sold off into the close as the SPX accelerated on the last two bars from 870 to 847 and closed at 848.92 or -3.2% on the day. It is not about fundamentals folks when it comes to trading. The equity futures market after the 9:30 A.M. - 4:15 P.M. period is a joke, but it is a bonus for day traders in the first hour of trading.
Crude oil continues to push $60 as it hit $61.30 yesterday before settling at 63.22. The $USD (dollar index) was +4.9% last week and was +0.4% yesterday to close at 86.76. Commodities made a parabolic move up, and we are seeing the same thing on the downside. The global recession hype has accelerated, and even has one of the incompetent empty suits on CNBC calling it a "soft depression".
The $NYA has already taken out the 10/10/08 low, as has the IWM, MDY, COMPX, and QQQQ, so the highest probability is that the SPX and INDU will do the same before there is a sharp reversal. However, the SPX futures are +40 as I finish this at 8:25 A.M. EST, so it will take some more hedge fund liquidation to make it happen today.
It is month end Friday, and today is the 1.618 Fib ratio of the 7/15/08 1200.44 and 9/18/08 1133.50 lows, so there is time symmetry in play following four straight lower lows for the SPX. We get the FOMC on Wed and the expectation is that they will cut rates again. Any significant rally on a rate cut, or month end advance, will be met with more hedge fund liquidation selling, and mutual fund redemptions. Equity allocation will not be increased on a scale in basis until 769 get taken out, or there is an overt change in trend.
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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