Manipulated GDP and Jobs Numbers Don’t Cut It
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.
In the previous commentary, it was anticipated that the 9/28/07 SPX 1526.75
close would hold up into the October month-end, as the Generals marked up their
portfolios. It did just that, as the SPX closed +1.2% on Wednesday to 1549.38,
but it was not until after the initial Fed rate cut move that day (0.25 point),
as the SPX took a dive to 1529.40, before reversing like magic up to the 1549.38
close. Good job, PPT, Generals and Hedge Funds. The euphoria didn’t last long, as
the market took a nose-dive the next day, on write-downs, credit, housing and
inflation worries, with the SPX closing at 1508.46 (-2.6%). This was the 10th
time this year that the index was +/- 2.0%. Seven of them have been minus, and
three plus. The biggest down day was -3.4% due to the China news flap on
2/26/07.
Friday started like it might be another mini-meltdown day, as MER was -13.2%,
MS -8.9%, and GS -7.0%, while C was -12.8% in 2 days. The SPX hit 1492.53,
versus the previous 1508.46 close, and then another “magic dust” rally carried
the SPX to a 1509.65 close, +.08%, while the financials recovered part of their
losses, with MER finishing at -7.9%, MS -5.6%, GS -4.4%. As I have said from the
initial BSC hedge fund subprime problem, it is never just one, and there are
many more write-downs to come. The Fed cut the discount and Fed funds rate by
0.25 point, as expected, but they also injected $41 billion dollars into the
system on Thursday, which tells you to put your helmets on, because the problems
are more significant than you think. I also remember the Fed’s first response to
subprime after the BSC hedge fund flap, which said “It is a very small problem
relative to the big picture,” as did Treasury Secretary Henry Paulson, and it
wouldn’t spill to any other parts of the economy. Of course, they are both
terribly wrong, or lied, probably the latter, based on the bogus GDP number
+3.9% we just got, and the 160k jobs number. Stay tuned to the next 2 GDP
revisions in November in December. The initial GDP number is 85-90% estimate,
while the jobs number is really heavy creative writing with the birth/death rate
adjustment, also a significant estimate. It was no coincidence that it was a
+160k jobs number last week, and President Bush followed right up on TV, telling
us how strong the economy is. That comes on top of that bogus 3.9% GDP number.
The market has become more of a casino that it ever was, and economic numbers
are an easy manipulate tool for the Fed, and whatever Donkey or Elephant
administration is in power in DC.
Friday was another reactionary day for daytraders, with the major indexes
setting up an RST long strategies after the discount opening. The SPX was
extended down to a 1492.59 intraday low versus the -1.0 Volatility Band at
1491.38, and the 2 previous 1490.40 and 1489.56 lows. It was a low common
denominator entry, and the SPX traded up to 1512.71 (have a nice day), and we
are thanking you, MER and C. There was also other symmetry with the .382
retracement (1576.09-1370.60) at 1497.59 and the 1498 (180 degree angle) from
1576.09. The RST entry was 1496.53. The same RST setup was available in the XLE,
following the 74.16 low, with the RST entry at 74.55, which ran up to 75.85. The
negative news that created the discount openings was a bonus to daytraders who
understand my extended volatility reversal strategies, including the RST,
1-2-3’s and Trap Doors. There are obviously similar setups in the other energy
component stocks.
The rate cut gave the markets more of the same, as the $US Dollar made
another new low at 76.22. The $GOLD contract hit an $811 high, closing at
808.50, +1.9%, while crude oil closed at $95.93, +2.6% ($WTIC). The inflationary
recession is in progress, and expect more pressure on the $US Dollar. A
short-term dollar bounce might come from this 77-76 zone, or 73-72. The
inflationary aspect of the declining $US Dollar keeps our trade focus on energy,
commodity and multi-national stocks, in addition to the major indexes and ETFs.
The next key time period is mid-November, and with a free trial to the trading
service, you can get these dates and reasons for them, in addition to finding
out why November 1 and 2 were also key time dates. It is free, and just by
checking the current archives, it will absolutely help your trading. If the SPX
1489.56 low is taken out, the next key price zone is 1476-1470. A decline into
this next zone will setup a possible long reversal, as the Generals begin to
work towards year-end, with the help of the PPT.
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