Haggerty: The Game Changes in 2010
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 remains in a 22 day narrow range, just below the 1121 .50RT to 1576 from 667. The NYSE volume remains very light as many hedge funds and institutions have most likely hedged their 2009 gains, especially now that the $USD has broken out of a 23 day trading range to a 76.33 high, and above the 75.81 50DEMA. The last thing these money managers need with only 14 trading days left in the year is to get blown out of the water by some panic unwinding of the “carry trade”.
Day traders have been able to capitalize on the swings within the 22 day range, and the best swing trade ETF opportunity was the OIH this week as it has declined -16.4% to its 200DEMA (110.78) in 32 days from its 132.07Â 10/21/09 high to a 110.44 low on Tuesday, and closed Wednesday at 114.31.
The SPX has not pulled back enough yet to take a long seasonal position, and the next “herd” opportunity is to play the long seasonal bias from the last 2-3 days in December through the first four days or so in the New Year.
The SPX is +67.8% low to high since the 3/6/09 667 low, with no more than a -9.1% decline from the 6/11/09 956 high to the 7/8/09 869 low. However, that will all change in 2010 as the current Socialist proposals become reality.
Since 1953 there have been 15 bull markets, and 10 of them gained between 60-90%. The initial rally in this secular bear market was +105% form 10/10/02 to 10/11/07 (769-1576), but the economic and fiscal policy then was conducive for growth, and what we have now is the exact opposite in the face of a derivative meltdown so expect a significant relapse in 2010. I hope you are adjusting your equity allocations as the market trades higher, especially when into the 1229 .618RT to 1576, which is also the H&S price objective zone.
Have a good trading day!
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