Markets Need Technology and Financial Leadership
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
SPYs, QQQQs (and more) for the next day’s trading?
Click here for a free one-week trial to Kevin Haggerty’s Professional
Trading Service or call 888-484-8220 ext. 1.
The previous commentary was 3/21/07, due to a
travel schedule. It mentioned that the FOMC announcement had more
significance, because the Fed would have to try to calm the markets in light of
the declining housing sector. Well, I don’t think anyone knows what the
hell they said, and even less about what it meant, but it resulted in a +1.7%
advance for the SPX on the day, as it traded from 1414 to 1438, right after the
2:15 PM FOMC announcement and closed at 1435.09. However, five days later
the SPX lost all of that spike, making a 1414.07 low on Wednesday, and hitting
1413.37 yesterday before closing at 1422.53. Shorts obviously got squeezed
that day, as the futures-accelerated move keyed the buy programs, on top of
whatever real institutional buying there was. The jaw-boning to keep the
market afloat is very strong, but when the perception of rising inflation and
slowing growth takes hold, the market’s path of least resistance is down.
The high of the FOMC spike was 1438.89 last Friday, and unable to take out the
.786 retracement level (1441) to 1416.57 from 1364, so a 1-2-3 lower top
scenario is still in play.
NYSE volume has been relatively light all week,
and yesterday was the highest at 1.5 billion shares, as the SPX was +0.4% to
1422.53, as was the $INDU to 12349. The volume ratio was 63, but breadth
was not relatively strong at +857. This is indicative of more
concentration in a smaller universe of big-cap stocks into the end of the first
quarter today. The SPX closed 2006 at 1418.28, and the generals will
mostly likely close it above that today. The only sector with consistent
upside price action is energy, and that was accelerated with the Iran flap, as
crude oil closed above $66 yesterday. The semis remain in limbo, as the
SMH hit the low end of its trading range yesterday since the week of 8/28/06,
with a 33.15 low. We have played this range from both ends quite a few
times, and yesterday the SMH bounced off that 33.15 low to close at 33.58.
Daytraders had a 1-2-3 double bottom to take advantage of that move yesterday.
The housing sector fallout will continue to grow, which will maintain pressure
on the financial stocks, which is a significant negative for any strong upside
SPX move. Strong markets are usually led by the QQQQ and $COMPX
out-performance, and that is not the case right now.
The intraday volatility has been excellent for
daytraders, with many RST and Volatility Band opportunities. The best
risk/reward for daytraders right now continues to be the major indexes and ETFs,
in addition to the energy sector and selected commodity sector stocks like FCX,
NUE and ATI to name a few. The unknown market factor right now is how
aggressive the Fed Markets Committee (PPT) will be in holding up this market.
If the $US dollar breaks below the 80-77 zone, they will have more than they can
handle in the equity market. The SPX 1364 level will get taken out.
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.