Key Time Period Strategy
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 rubber band snapped for a day on the Fed rate cut, but technically, it
was also short-term overbought, as the SPX was +8.0% in 10 days off the 1406.10
11/26 low. NYSE volume yesterday was 1.54 billion shares, with 1.4 billion
shares down. The 4 ma’s of the volume ratio and breadth on Monday were 72 and
+1091, which is extremely short-term overbought. The air pocket on the rate cut
yesterday sent the SPX down to a 1476 intraday low, a -2.5% decline to a 1477.65
close. The 200-233 day ema zone is 1474-1466, but I see that the SPX futures are
+16.5 points as I am doing this at 7:45 AM, so it looks like the PPT (Plunge
Protection Team) is playing in the casino today. As you would expect,
financials, housing and cyclical groups led the downside, with the $BKX
-5.2%, $XBD -5.0% and XLB -4.2%. There was a rush to Treasury securities, and
the 10-year is back below 4%, 2-year at 2.95% and the TLT was +2.0% yesterday.
The “herd” of street analysts are now saying that financials will lead in 2008,
and have already discounted more bad news (challenge), which everyone knows is
coming. Most of these analysts favor the investment banks, not the
housing-related crash cars.
In the 12/7 commentary (Short Term Market Strategy), I said that “the market
unanimously expects a rate cut, and discounted it with the current advance, but
could still act as a catalyst for some markup by the Generals into year end. For
traders, a quick downside (air pocket) will set up a short-term long index proxy
position trade into year end.” Well, we got the air pocket, and 12/14 is a key
time date (+/- 2 days), so any continued weakness will set up an opportunity.
Expect erratic market action into year end, but with an upside bias.
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