What “Yogi” Says About the Market
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 1074.77 rally high made last week (9/17), which is still in place, but there has yet to be a close below the low of the high day, so as Yogi says “nothing significant can happen until that happens”. The price action of the $US dollar continues to control the equity market, which is nothing more than a commodity itself right now.
The declining dollar this morning has the commodities trading higher, and the SPX +7.0 points at 8:50 AM, so if that holds through the opening, the energy and materials stocks will be the upside leaders to start the day, and will all have gap up openings.
NYSE volume was light yesterday at 1.2 bill shs as the SPX finished the session at -0.3%, while the USD was +0.4. However, both the QQQ and COMPX finished positive at +0.3, and +0.2. The SPX had a gap down opening because of the early $US dollar strength, and hit 1057.46 on the 10:00AM bar, after which it formed an ascending triangle. The UDN (inverted dollar down ETF) broke out of a contracted volatility range pattern to the upside on the 11:05 AM bar, and so did the SPX out of the triangle setup. The UDN ran to 27.96 on the 11:45AM bar, and then went sideways for the remainder of the session, as did the SPX which went out at 1064.66.
The FOMC meeting is Wednesday, and they have already indicated they plan to keep interest rates low for the near term. The U.S. dollar fundamentals are extremely negative as the Fed has exploded the money supply to try and fix the “derivative meltdown”, which was the most inflationary event in our time, and this current socialist Administration is set on running the biggest deficits the world has ever seen. This has resulted in flooding the world with new dollars at a time when U.S. interest rates are much too low to make it a wanted currency. Foreign investors are obviously now worried about the declining purchasing power of the dollar, and they are cutting back their over weighted holdings in dollars and U.S. Treasuries, and many are calling for a new reserve currency, so the odds favor more new lows in the dollar.
The 1074.77 SPX rally high (+61.1%) off the 667 low was on a key time date, but not at a key time zone, which is the 1121 .50RT to 1576 from 667 or +5.2% from the 1064.66 close yesterday. This corner had expected a pullback to 956-944 zone before the SPX hit 1121, but the current vertical +8.3% rally of the 9/2 992 low changed the odds considerably for that to happen. The market is now closing in on month end, so any significant decline before that is unlikely, and the expected pullback zone is higher. The Sept/Oct “Death Zone” period has started out more like “Happy Valley”, but the jury is still out on that case.
Have a good trading day!
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