Market Reverses From Key Price and Time Zone
From 1990 to 1997, Kevin Haggerty served as Senior Vice President for Equity Trading at Fidelity Capital Markets, Boston, a division of Fidelity Investments. He was responsible for all U.S. institutional Listed, OTC and Option trading in addition to all major Exchange Floor Executions. For a free trial to Kevin’s Daily Trading Report, please click here.
The SPX had an “air pocket” yesterday and broke a 10-day narrow trading range in the key price zone, and made a 978.51 intraday low before closing at 979.73, or -2.4%. However, this should be no surprise to previous readers, because the reversal from the key price and time zone was anticipated in previous commentaries, and are included for your review:
“The SPX hit the anticipated 1010-1015 key price zone with a 1018 intraday high, and 1010.48 close on the 8/7 key time date, which is the 2.618 Fib ratio in time of the 1/6-3/6 leg down from 944 to the 667 low. The leg down was 41 days, so 2.618 x 41 is 107 days, which is 8/7. There were also 2 other time dates last week before 8/7.”
“With the major indexes at key RT zones relative to their bull market highs, it is obviously a significant short term market juncture, especially because the market is so extended in price relative to time since the 869 low, and also because of the negative 5RSI momentum divergences in the major indexes.”
“I still think that the higher probability is for the SPX to pull back and test what is now support at the 956 zone, and that the next 5.0% move or more is down, not up.”
The SPX went out yesterday at 979.73, which is right on its 12-month EMA of 979.63, and is the first support level. The futures are +6.5 points at 6:35 AM as I do this commentary, but after the -2.4% “air pocket” yesterday any early bounce would be no surprise. However, the odds favor a further decline down to the 956-945 zone, which is the major support.
The “herd” that has missed this market opportunity entirely was forced to get involved on the B/O above 956 in fear of missing Wave 3, so a pullback to that zone will create more buyers that want to add to positions, and give those that have still done nothing to put some money to work. If the SPX takes out the 956-945 zone then the strongest downside symmetry is the .236 and .382 Fib RT’s to 667 from 1018, which are 935, and 884. The 1014 .382 Fib RT to 1576 from 667 has held so far, and the next key zone above that is the .50RT at 1121.
 However, I think the odds are 60-40 right now that there will be a Sept/Oct downside scare before any run to 1121.
Have a good trading day!
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