Both Scenarios Mean Good Trading Opportunity
What Tuesday’s Action Tells
You
The market action yesterday was all about the
futures attack on some exit poll information. The SPX
(
$SPX.X |
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PowerRating) air
pocket
from the rising wedge (five-minute chart) started on the 2:45 p.m. ET bar,
traded down from 1139.37 to 1128.12, closing at 1130.58, almost unchanged on
the
day. Two anti-Bush sectors led the downside, with the PPH -1.7% and
(
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PowerRating)
-2.6%.
NYSE volume was 1.66 billion shares with the
volume ratio neutral again at 51 and breadth +258.
I am doing this on Tuesday evening as the
election will go into the wee hours, and it is one that you have to
attend.
From a trading standpoint, the better
scenario
would be a significant negative reaction about the outcome with a sharp
selloff.
That would set up a year-end trade as the Generals try to salvage the year.
The positive reaction would be for the SPX to
trade above 1146.34, which would be a new seven-month high and then breakout
above 1163.23 with 1161 being the .50 retracement to 1553 from 769, the
October
2002 low. This would set up 1254, which is the .618 retracement to 1553 as a
likely price objective. Hedge funds would accelerate the move as the
Generals
would be forced to take an aggressive approach with visions of a much better
year-end than they expected, based on the last nine months’ action. It is a
+7.8% move above 1163, or +9.4% above that 1146.34 high.
Unless there is an unusually long contested
period, I would expect some good trading opportunities into
year-end.
Have a good trading day,
Kevin Haggerty
P.S. Trade with me for a year.
Click here.