A Market For Timers Not Buy/Holders
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.
Since the SPX rallied +27.3% in 29 days from the 741 key price and time zone there have been two more reversals with price, time, and momentum symmetry. The SPX formed a trading range between 919-851 with two other test lows at 857. The initial move was an upside B/O of the range above 919 which failed at the 938-944 key symmetry zone. The actual high was 943.85, versus the 180 Degree angle at 944 measured from the 742 low. The .236RT to 1576 from 741 is 938, and the SPX did not close above 938 on the rally to 943.85 The market had reached extreme ST-O/B conditions at the 944 level, with the 4DMA of the VR at 75, and breadth +1747, while the 5RSI was extended to 81.21.
The combination of the key price, time, and momentum symmetry is what you look for in gauging the probability of a significant trading reversal. I didn’t explain the time symmetry, but you can check that out with a free trial to the trading service where you can access the recent commentaries which outlines all of the time symmetry. The SPX chart I included today has some of that time symmetry labeled.
The hour glass has turned upside down, and the SPX hit another key price, time, and momentum zone last Thursday when the SPX hit an 817.04 intraday low, versus the 818.64 .618RT to 741 from 944, and bounced to close at 843.74. This was a “no brainer” day trade for trading service members. The 4DMA’s of the VR and breadth reached extended ST-O/S conditions with the VR 21, and breadth -1265, while the 5RSI closed at 18.95, the lowest since the 741 low at 18.60.
The SPX closed Friday at 850.12, and back to the initial trading range 851 low, which is the initial resistance, followed by 919, and then the 938-944 zone. The 3 month “Panic of 2008” was unprecedented unless you are in your late 90’s and still trading, while today marks the beginning of what appears to be a Socialistic Government if all the platitudes and rhetoric becomes reality.
The initial new big tax and spend proposal floated by the Congress that they persist in calling stimulus, “ain’t” going to make it happen, so let’s hope the final bill is more realistic and capitalistic. The good news is that the reversal from a panic condition will probably be sharp, and surprise most investors, but you had better have a plan to sell into strength, because you are not headed into a long period of prosperity over the next few years. It is a timers market, not a buy and hold market.
Have a good trading day!
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