Key Price Zone & S/T – O/S

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 11/28/11

The trivia hype was that last week`s SPX -4.7% decline was the worst Thanksgiving week decline since 1932. However, other than the day before the Holiday, as I pointed out in a previous TS commentry, last years 4 day Thanksgiving week for the SPX went -0.2, -1.4, +1,5, H, -0.7 [1:00PM], and then it went -0.1 and -0.6 the last two trading days of the month.

As of the 1:00PM close Fri the SPX closed down for the 7th straight day at 1158.67 which is right at the 1158 .618Rt to 1074.77 from 1292.66. The NYSE volume was only 442mm shs Fri versus 428mm last year with the 1:00PM close, while the VR was 41, BR 43, and A-D -379. However, the 4 DMA`s of the VR and BR remained S/T-O/S at 20 and 27, while the daily chart 5RSI was 13.73.

The market had another “Europe Gap Up” NYSE opening today as the SPX hit 1194.11 on the second bar and has gone sideways since that high and is trading at 1195 on the 11:35AM bar or +3.1% as I am finishing this commentary. As with entire BS we get out of Europe, there are no hard facts or reasons for the significant “risk on” move as the USD and TLT trade down, while Stocks, Commodities, Gold, and Crude oil trade higher. It is certainly a positive for money managers as month end is Wed.

Technically the SPX was expected to trade down to the 1158 .618RT zone once it took out the 1183.72 .50RT to 1074.77 from 1292.66, which it did closing at 1158.67 on Fri. Today was also trading day 8 since the B/O of the dynamite triangle within the larger symmetrical triangle at the H&S neckline, and below the 200DEMA, which is lower than the 200DSMA. It also has other Fib number symmetry in that today is 21 days from the 10/27/11 1292.66 high. The SPX has significant price symmetry with the 1158 .618RT, and was also significantly short term O/S coming into today, so it didn`t take much to touch off the rally this morning.

The market enters a seasonally strong period for Dec and is extremely S/T-O/S at a significant technical zone. The trivia states that the SPX has been up 75% of the time in the 3rd year of a Presidential Cycle for Dec, and 65% the past 48 years ex the 3rd year cycle. However, unless Obama gives up his class warfare witch hunt to raise taxes as the US and Europe ecomomies sink lower into recession, eliminate the burdensome anti-business regulations and ridculous EPA restrictions that are preventing the US from pursuing a real energy policy, he won`t have any election year goodies to con the people before the 2012 election, and you can bet he won`t propose a plan to reform the tax code which lowers taxes.

If he gets elected again in 2012 it will be an extremely difficult 4 years in the US equity markets as the current Secular bear market plays out though late 2016 or 2017. The Secular bear and bull markets last about 17 years [2 x 8.6] There was a Secular bear market from 1965-1982, a Secular bull market from 1982-2000, and now the current Secular bear market from 2000-2017. You don`t make money in secular bear markets with a buy and hold approach, but there are some excellent bull and bear cycles within the secular bear markets if you know how to recognize them.

It is all about the Govt`s overspending and continuing to borrow as the interest expense grows and the US pays 40% of that interest expense to foreign holders, which does essentially nothing for the US economy. Unless the “US prints money, cuts much of the borrowing, and adjusts the money supply, which together will enable the US to eliminate about 1/3 of the Govt, therefore cutting much of the direct taxation” [ M.Armstrong], it is just a question of how the Ponzi scheme will continue to work with over $116 trillion in US unfunded liabilites, so all of this financial band aid talk in Washington is just B— S—.

I have included the relevant Fib RT and extension symmetry charts from the 1370.58 and 1292.66 highs. I also included the Square of 9 angle table which shows you the 90 degree angle symmetry at 1256.96 90 versu the 1258 .618RT.

I see nothing that indicates the 1370.58 cycle high will get taken out but there are many things that could accelerate the SPX to new lows below 1074.77, which I think is better than a 50% probability at this point.

p>fib1 chart

p>fib2  chart

p>1292 chart

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