Market Symmetry and Volatility in USO and SPX
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The initial 1387-1403 resistance anticipated in the previous commentary
(2/26) held up the last three days with highs of 1387, 1388, and 1378 yesterday.
Bernanke painted a bleak picture is his testimony to congress this week, on top
of the accelerating crude oil, gold and other commodity prices, not to mention
runaway food prices thanks to what is becoming the great “ethanol hoax” The
derivative meltdown and credit crunch is the Feds major problem, and you will
probably see a significant bail out or two by the Fed before there is a turn for
the better. It will be more of the same, write the inventory down, but still no
buyers for the securities.
The energy move in the last 14 days is vertical, as the USO
(
USO |
Quote |
Chart |
News |
PowerRating) is +19.2%
from 68.57 to the 81.74 high yesterday. New cycle highs were made on the 4 month
range B/O above 79.09 Two weeks ago, when the USO
(
USO |
Quote |
Chart |
News |
PowerRating) was at 68.57 the
“pundits” were telling you that crude oil was heading south to the $65-$70 zone
because of the economic slowdown, and now they are touting the current advance
as the next big leg of the commodity cycle, and “they” are jumping into the
commodity related sectors again like “pigs feeding at the trough”, and you know
how that kind of bubble emotion will end.
The daily volatility on the news reactions continues to benefit day traders
using the specific strategies that I mentioned in the 2/26/07 commentary.
Despite the increased volatility, the major indexes continue to trade with
significant price and time symmetry, so we have been able to maximize key
reversals on both a short term and intraday basis.
Today is month end, and the $SPX futures are -15 points at 8:00AM, so the most
likely initial trading opportunities for day traders will be Trap Doors with Fib
(1350) and volatility band symmetry (1352, 1347, 1344, 1336). My overall market
outlook hasn’t changed, which is that it remains a bear market, and the cycle
low will be below 1270. A rally to the 1420-1445 zone would be a high
probability position short opportunity. However, the initial short zone remains
1387-1407, which includes the Head & Shoulders neckline.
The next commentary is Tuesday 3-3-08
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.