Time Symmetry and Year-End Markup
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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The SPX gave back 43% of last week’s 3 % gain in the last 2 days, after the
SPX had advanced 4 straight days last week, from 1406.10 (Monday low) to the
1488.94 Friday high, and 1481.14 close. Yesterday’s low was 1460.65, and the SPX
futures are +10.50 points at 7:05 AM this morning as I complete this, so the
“casino” lights are green again. Between the pre-market futures forcing discount
or premium gap openings almost daily, and the highly inefficient 9:30 AM
electronic opening process on the NYSE, the best daytrading opportunities occur
in the first 90 minutes of trading. December 5-7 has time symmetry, but the
market is not at a key price zone after the oversold rally last week, and there
hasn’t been much of a pullback, so any time volatility could affect the market
in either direction.
The unanimous expectation is for a year-end rally, or we should say “blatant
markup.” The surprise would be another leg down for the SPX before any markup
takes place in the second half of the month. If it plays out that way,
short-term long index proxy positions can be taken on any decline in the next 5
days or so. The Generals continue to take a more defensive posture, as they
overweight consumer staples and healthcare, while underweighting financials and
consumer discretionary stocks, in addition to taking profits in the basic
materials and energy sectors.
The initial upside focus today for the SPX is the 233-200 day ema zone, which
is 1465-1473, followed by the intraday Volatility Band levels at 1480, 1485 and
1489. The most significant initial zone on a rally is 1490-1493 followed by
1510-1515. If the early green futures reverse and head south, then the downside
levels are 1457 (.382 retracement) followed by the 1448-1445 zone. Daytraders
will do better into year end by focusing on the major indexes, ETFs and the top
50-60 SPX percentage gainers for 2007. Stay with the big-cap stock percentage
gainers, as the programs can accelerate these leading stocks, and you can also
get a boost, as any demand for ETFs forces the Trust to buy
these stocks regardless of fundamentals. This is probably one of the major
reasons this bull cycle has extended in time as the supply of ETFs keeps coming
to the market, which creates the artificial buying. However, this will also
accelerate the downside in a significant bear market.
Any Fed rate cut next week will not solve the current subprime and related
problems, and there are certainly more negative events/news on the near horizon.
However, it might be a catalyst to let the Generals give us a good year-end
market, and a positive short-term long position trade in the index proxies.
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.
Have a good trading day,
Kevin Haggerty