New Highs but Same Sector Focus
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?
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On Tuesday, it was a “fear day” with the SPX -1.4% to 1510.12 on NYSE volume
of 1.64 billion shares, with the volume ratio 14 and breadth -1761. Yesterday,
it was a “Pigs at the trough,” with the SPX +1.9% from the previous 1518.36
close on NYSE volume of 1.66 billion shares, with the volume ratio 87 and
breadth +1540. The $INDU made new cycle highs above 13690 in the first half
hour, led by the AA gap, and the SPX took out the 1540.56 cycle high on the 3:15
PM bar. The SPX gained 28.9 points on the day, and 25.2 points of that gain came
in the first 30 minutes, and from 2:25 PM to 4:00 PM. Is it a coincidence that
there was a significant upside market spike when the “negative Iraq report” was
due, and the President was scheduled to speak for an hour, not to mention
several administration officials making TV appearances talking up the economy.
If it was, it follows a definite pattern which I have been keeping track of
since the run-up to the mid-term elections which started last June. My guess was
that the PPT (Plunge Protection Team) was active yesterday, accelerating the buy
programs, which certainly squeezed the shorts that had built up on the heels of
the subprime problems, expected topping of the over-leveraged LBO market, and
the $US Dollar weakness that is threatening to take out the 80.39 10-year low.
The SPX and $INDU broke out of their 10-week trading ranges yesterday, and
this gives traders new levels to work, which means more opportunity. Next Friday
is an option expiration, and also has some time symmetry, so that will generate
some volatility for traders. The spike yesterday to new highs changes nothing
relative to the negative time risk/reward of this current extended bull cycle.
Day traders will continue to benefit most from a focus on the technology
and energy sectors, just as you did before yesterday’s spike to new index cycle
highs.
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.