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 1/13/10
The SPX finished the first 5 days of the year at +2.7, the QQQ +1.7, and this week the SPX is +0.1 so far, but the SPX is -1.7 so it is flat on the year. The QQQ gave an early warning sign because it had a negative divergence in its 5RSI, while the SPX was significantly ST-OB with the 5RSI above 84, while the QQQ was below 60. Investment sentiment indicators are extremely bullish, as is the survey by the so called top economists who are rarely if ever right on market direction as you evidenced at the March 2009 major index lows.
The commodity sectors were leaders the first week with significant gains, and crude oil (WTIC) hit a cycle high of 83.95 on Mon after breaking out of the 82 high trading range. The OIH is -3.2 this week so far, but that is after gaining +21.7 from 110.44 to 134.45 on Mon in just 22 days. The inverse correlation of the USD and SPX has not been a key factor in market direction for the last month as the SPX remained in a trading range as the USD advanced to the 78.34 200DEMA with a 78.45 high, and went out yesterday at 77.02
The anticipated SPX key price zone after the 1121 is 1142-1146, followed by 1154-1163, and there is also some key time symmetry this week and next, so the higher probability is a pullback to at least the 1126.49 20DEMA, or 1106.83 50DEMA, and minor support at 1101.36 which is the 10/21/09 swing point high before the decline to 1029.38 on 11/2/09. Based on recent price action I expect the Generals and hedge funds to get more aggressive on the buy side after any significant pullback, especially to the 50DEMA zone or more.
The BLS jobs report numbers are pure nonsense, but CNBC continues to hype them and always leaves out the reality of how over stated they are mostly due to the Birth/Death Model, and never tells you what the revisions were which are obviously negative. The bottom line is that the real unemployment rate is now above 20%, and the nothing the Socialist administration is doing right now will reverse it. There are so many ridiculous obtrusive tax and spend proposals floated each day you can’t keep up with them, but none of them are positive for the market going forward.
There is always hype during earnings season so there will continue to be daily price noise, but this increased daily volatility is always a bonus for day traders, especially when you are using the Volatility Bands in the Trading Service.
The next commentary is Fri 1/15/10, and maybe TM’s will include the dates of each article in the contributor section if you put some email pressure on them.
Have a good trading day!
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