Market is rigged through elections
Kevin Haggerty is a full-time
professional trader who was head of trading for Fidelity Capital Markets for
seven years. Would you like Kevin to alert you of opportunities in stocks, the
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The SPX and other major indexes are all at extended
longer-term standard deviation levels. The SPX hit the 1385 .786 RT to
1553 from 769 on Thursday, followed by the -0.9% “air pocket” on Friday.
The SPX previously declined -6.1% from the 1253 .618 RT zone and -8.1% from the
1323 .707 RT zone after the 1326.70 5/08/06 high. The current angle of
ascent cannot be sustained; invariably spikes up are followed by spikes down.
The major indexes are at extremely overbought levels, and there are negative
relative strength divergences for the QQQQ, $COMPX, and IWN. However, not
for the SPX or $INDU, as there is little doubt some degree of intervention in
front of the elections has been a significant part of this rally. In fact,
any potential crisis has become a positive technical indicator. The
intervention starts with buying of the futures, which accelerates the buy
programs, and the higher prices force the institutions to participate.
When this is done in front of a quarter or month-end markup, the effect is even
more significant, and let’s not forget any shorts that got run over along the
way. There have been recent inquiries about this possible intervention,
including the most recent one by Congressman Ron Paul. But he has been
stonewalled so far, other than to get the Federal Reserve to admit there is a
“market committee” that meets regularly. Paul has requested those minutes
and so far has gotten nothing. Why would that be the case unless “they”
have something to keep from the market participants who make significant
financial decisions each day but would not be happy campers if they knew that
the “game” has some committee that is allowed to use the equity market as a
government or Federal Reserve tool.
With two days left in the month, and the elections on Nov. 8,
you really don’t expect much of a decline, do you? Traders can continue to
play the initial Trap-Door contra moves off any futures-induced discount
openings. The energy sector must pullback more if any continuation move,
like the potential 1-2-3 HB in the OIH, sets up. It makes sense for
traders to concentrate more on the major indexes and ETF’s into
month-end/elections and avoid any individual stock random price movement.
There are some very extended major holdings of the generals that have been
marked up, and there will be some sharp downside “air pockets” when these
mid-term election, month-end games end. System and swing traders have
significant risk on the long side right here, and daytraders can continue to
play the extended and contracted volatility situations, and going home flat at
night.
Have a good trading day,
Kevin Haggerty
Check out Kevin’s
strategies and more in the
1st Hour Reversals Module,
Sequence Trading Module,
Trading With The Generals 2004 and the
1-2-3 Trading Module.