SPX Declines but Traders Win on the Long Side
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 $SPX hit a 1366.59 intraday high on Tuesday after the reversal from the 1331.29 low last Thursday (6/12), which was the anticipated key price and time zone that I repeated for you in the previous commentary. You can review that by checking my article archives. I suggest you read the last two commentaries to get a better feel for the current market action, and also the potential fall out if the Fed starts raising rates.
NYSE volume was 1.28 billion shares yesterday with the volume ratio 25 (Adv Vol /Adv Vol + Dec Vol) and breadth -1401. Banks led the downside ($BKX -1.9), which has become the norm, but the major brokers – Merrill Lynch
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PowerRating), Goldman Sachs
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PowerRating) – made a significant intraday upside reversal after big opening gaps down on the MS earnings, and the $XBD finished +0.7 The $SPX finished -1.0 % to 1337.81, while the $INDU, QQQQ, and $COMPX were all -1.1% for the session. The $HUI +0.9, OIH +0.7, and XLE +0.4 finished green.
The market action on this reversal has not been strong by any stretch as the $SPX hit 1360.03 on Friday following the Thursday 1331.29 low on NYSE volume of only 1.2 billion shares, which was the lowest volume of the week. The reversal high was 1366.59 on Tuesday, and the $SPX finished -0.7 to 1350.93 on NYSE volume of 1.1 billion shares.
In the previous commentary, I said don’t mistake the reversal trading opportunity for a change in trend for the $SPX, and $INDU, because they’ll remain in their downtrends until there is a swing to higher highs, and higher lows. I also said that I expected the 1327 level to hold into month’s end, but that certainly looked tenuous yesterday as the $SPX hit a 1333.40 intraday low before closing at 1337.81. I still think that the $SPX will at a minimum, close above 1327 into the month end, because it is the 6-month report card for the “Generalsâ€, and if they can mark it up they will, as sure as death and taxes.
The PPT (plunge protection) will probably step in to prevent any significant decline into the election, but after that all bets are off, and I think that there is a very high probability that the $SPX 1257 low will get taken out and the bear market will trade lower.
The initial morning decline yesterday was a bonus for daytraders familiar with my Volatility Bands (VB) and strategies. I have included the $SPX (5-min) chart to highlight the two $SPX-defined strategy reversals yesterday, but there were similar VB trades in the QQQQ, DIA, and MDY, in addition to many of our daily focus list stocks in the Trading Service.
If you want to learn about the Volatility Bands and other powerful strategies you can take a free trial to the Trading Service by calling 888-484-8200 (ext 1, sales) or by going to www.kevinhaggerty.com.
The next commentary is Tuesday 6/24/08
Have a good trading day!
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