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 advanced +8.5% in 9 days off the double bottom 1042.17 low on 6/8, to the 1131.23 intraday high on 6/21, and then reversed -5.6% in 4 days to the 1067.89 low on Friday, before closing at 1076.76 or -3.6% on the week. It is significant to note that the 1131.23 reversal high was at the 1130.29 .50RT to 1219.80 from the 5/24 1040.17 low, and that when it reversed it closed that day at 1113.20.
The euphoria after the B/O of the 1101-1106 resistance zone, which included the 200DEMA at 1101, only lasted 5 days and swing traders were forced to exit long positions [without a loss] last Tuesday or Wednesday when the SPX reversed the 200DEMA to the downside. That is obviously the initial upside resistance again.
The short term trend doesn’t change unless the 1131.23 high is taken out, provided the 1067.89 low holds up. If 1040.78 falls then you can put the lights out because the SPX will hit 1008 at a minimum, and probably 943 which is the .50RT to 667 from 1219.80. There is also parallel line symmetry where the AB leg of 179 points [1219.80-1040.78] would equal a CD leg at 952, measured by subtracting 179 points from the 1131.23 high. On the upside the initial resistance after the 1130.23 .50RT is the 1/19 1150.45 high and 1151.41 .618RT to 1219.80 from 1040.78
There has been nothing positive in the economic numbers recently and it is very obvious that we are not in a V shape recovery, unless you are one of the Democratic shills that have been trying to put a positive spin on what Washington is destroying. Unfortunately, reality is getting a bit clearer, even to some of the die hard Keynesians who are now hedging their overly optimistic projections, which right now look ridiculous. The borrow, spend, tax, tax, tax, and over regulated anti-business approach by the current Administration has put this country on a fast track to a sovereign debt default.
Month end is Wednesday, and the ST-O/S condition as of Thursday both provide an upside bias the next few days, and with the long July 4th weekend coming up the SPX should close higher on Friday than the 1076.76 close last Friday.
Have a good trading day!
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