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 socialists lost a key election in Massachusetts on Tuesday and the next day they changed their colors and “saw the light” and if you believe that I have a bridge in NY you can buy on the cheap. However, yesterday Obama countered with his bank attack regulation proposal and the market immediately sold off. The SPX made an intraday low at 1114.84 and closed at 1116.48 with the 50DEMA at 113.61 Both the INDU and NYA traded and closed below their 50DEMA’s.
The devil is in the details, and the market doesn’t know the specifics yet. My bet is neither does Obama, so that is enough to keep the cloud over the market until there is some clarification.
The air pocket yesterday was on overt news, but it was also from a key price and time zone, and as I said in the previous commentary (1/20) the probability for a reversal was high. I also said that the “herd” would view a pullback to the 50DEMA it as a buy opportunity, but in view of the bank regulatory proposal that could change as the Generals sit back for a few days to see how the details play out.
The SPX futures are down -3.3 points as I complete this at 9:20AM, and day traders that take a long contra move setup today will look to turn it into a swing trade with a tight stop if there is a decent profit cushion into the close, so as to be on board if the Generals turn the one day decline right around and rally it from the 50DEMA zone. However, the trade has to close above the 50DEMA.
However, I think the highest probability is for lower prices below the 50DEMA as the market does not like the uncertainty and the financial stocks will continue under pressure.
Have a good trading day!
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