Sell February Rally, Buy March Lows
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 SPX gained +2.7 on Friday to close the week at 868.60 (+5.2) after 4 straight down weeks, while the QQQQ was at +7.9 on the week and continues to provide the recent sector leadership with 6 straight up days and closing yesterday at 31.50.
The QQQQ made a new rally high yesterday at 31.67 (daily chart) from the 11/21/08 low (25), and the SPX is bumping up against that 878 swing point high after hitting 875 yesterday, before closing at 869.89. NYSE volume had expanded to over 1.6 bill shs last Thursday and Friday when the SPX went +1.6 and +2.7 but dropped off to 1.26 bill shs yesterday with the SPX at +0.1 to 869.89.
This week is all about the “Pork Bill” that will be passed by the Socialists, and the TARP, so you can expect some erratic price movement. At 11:00 AM this morning Tim Geithner will speak on the revamped TARP fund, followed by Bernanke at 1:00 PM testifying about the financial crisis at a House Panel, and then we get “Tax Expert” Tim Geithner again at 2:30 PM testifying on the new TARP at a Senate Banking Panel. This means Day Traders should sit it out unless there are some good 1st hour setups, or else the market gets extended in the afternoon after the news hype.
If the SPX continues its advance into the 2/18-2/21 time period the odds favor a significant downside reversal to March lows that could test the 741 low, followed by a significant upside rally. It is nice to be in a Secular Bull market and just sit back and Buy & Hold, but unfortunately we are in a Secular Bear market until probably 2017, and the bull and bear cycles will be more like the 1970’s, so market timing takes precedence for all but the young.
Have a good trading day!
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