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.
Commentary for 8/8/11
The major indexes are all trading well below their long term moving averages, and the SPX is now -14.8 % from the 1370.58 high after going
-7.2% last week, making an 1168.09 intraday low on Fri and closing at 1199.38.
On the weekend S&P downgraded the US debt which is a first, and this was a surprise at this time to the Administration because Fitch and Moody`s had just reaffirmed their versions of AAA ratings. The agency itself is suspect at best as they have missed every crisis we have had, especially the Mortgage Crisis, and have always had a financial interest because they got paid by the entities they rated. The market timing of this move on top of the ECB bond bailout of the “PIIGS” and the significantly slowing global economies couldn`t be worse and one has to question the political motives of S&P.
The bond market has reacted to the move with lower yields despite the downgrade, and that is how it has traded since the full blown media and political hype on US debt default started. However, the SPX futures were down about -2.5% when they opened on the weekend, and are -2.8% [-33.9 points] as I am completeing this commentary, so last weeks SPX 1168.09 low will most likely get taken out in the opening period. Gold made new highs as expected.
When the SPX made a lower high at 1356.48 on 7/7 followed by another lower high at 1347 [7/21] it then went knife down and took out the long term MA`s again at the 1286-1276 zone, which was certainly a significant negative in itself, but the bottom dropped out when the 3/16/11 SPX 1249.50 major support low also got taken out.
It was a perfect storm with the growing Euro zone problems, realization of a slowing global economy, and the debt ceiling saga, all following an extremely O/S market at the end of April with the SPX 5 RSI at 85. It was a also a significant Pi symmetry date as 4/24/11 is 25.8 months [3 x 8.6], and 4/29/11 was 785 CD [2.15 x 365] from the 3/6/09 667 low followed by the Mon [5/2/11] 1370.48 high.
The SPX decline to 1168.09 on Fri put it at the -5.0 STDV level on a 6 month STDV Channel and that will happen again this morning. The current knife down will probably be followed by a quick vertical move to the upside, but the 1370.48 5/2/11 high won`t be taken out this year, and there is better than an 80% probability that it is this bull cycle high.
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