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.
Commentary for 2/22/13
The SPX churned last week as it closed all five days within 4.4 points [1521.38-1517], and finished flat at 1519.78, or +0.1% on the week. The index was O/B on short term, intermediate and long term basis as evidenced by the 5 RSI in all periods.
The index has advanced +9.5% YTD from the 12/31/12 1398.11 low to the 1530.94 high on 2/19/13. The daily chart 5 RSI peaked at 93.42 on 1/25/13, followed by a negative divergence to 80.79 as the Fed`s artificially inflated index continued to creep higher. It is certainly not because of the U.S. economic or fiscal condition, regardless of the biased information flow from the Sell Side pundits or Administration.
The weekly 5 RSI peaked at 83.43 with the 1530.94 high and the monthly RSI at 80.36, so the market wasn`t saying “buy me” because the timing is good and I am cheap”. There was also some Pi time symmetry yesterday in addition to 2/19/13 being the 1.618 Fib Extension of the SPX 10/10/02-3/6/09 bear market lows. The Pi symmetry is that 2/18/13 is 8.6 months [Pi] from the 6/4/12 1267 low in addition to the market being O/B on a daily, weekly, and monthly basis. All of the timing dates are anticipated well in advance in my Daily Trading Service.
The SPX declined -1.2% on Wednesday followed by continuation weakness the next day with a 10:00AM bar 5 min chart 1499.56 low as I am completing this article. The index also declined -1.2% on 2/4/13, but it reversed the next day and has advanced to the new cycle high at 1530.94.
I expect this to be a correction and not the end of the bull cycle within the secular bear market that began with the bull market 2000 top. The odds still favor the 1576 2007 high getting taken out before this bull cycle ends. The most significant Pi timing period in 2013 is June, and the first week in August.
You can`t predict markets, but you can identify high-probability reversal and acceleration zones with a positive mathematical expectation of success. The primary tools I use to determine these zones are Pi, Square of 9, and Fibonacci. There is a natural order to the markets and you can use the primary tools to successfully time the markets regardless of whether you are a money manager, investor, or trader. I have given a presentation on this subject to the Market Technicians Association, and you can get more information about my manual “Markets Trade with Geometric Symmetry’’ in addition to 6 free primary tool calculators, at www.geometricmarkets.com.
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