Geithner and Obama Strike Again
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.
In the previous commentary (3/27) I said that the SPX +24.9 gain in 14 days was obviously extended in price relative to time, and was unsustainable, so there was no reason for any new position buying at the extended levels. The SPX hit 833 last Thursday (3/26) versus the 838 .618RT to 944 from 667, so it was at a key price zone, and the most extended in price relative to the time period since the 30’s.
 I also said that the SPX was +13.3 for March as of the 832.66 close on 3/27, and that you would expect that the Generals and Hedge funds would try to protect those gains into month end, which is today, and I also said to keep your helmets on after month end in anticipation of a reversal.
 However, it didn’t play out that way as the SPX went -2.0 on Fri, and took a -3.5 dive yesterday accelerated by the news that Obama is now running the auto industry, in addition to the major banks, AIG, FRE, FNM, etc, and then Geithner dropped another one of his strangely timed bombs that some major banks will need more substantial Government aid. That was all before the opening, so the SPX futures were -24.75 points on the 9:30AM bar (-3.0) and then continued south from there, while the SPX closed at 787.53 (-3.5) after a small bounce off the 779.81 intraday low. The INDU finished at 7522 (-3.3) and the QQQQ -2.5 to 30.06.
After any reflex bounce today, the market enters what will be a very negative earnings season, and there will be some “air pockets” that will likely see the SPX decline to any of the 770, 750, or 730 (.618) Fib retracement levels to 667 from 833, and anything below 730 will test 667. If there is a 123 higher bottom at a Fib RT level, and then the SPX takes out 833, it will force technical money into the market on the assumption it is the beginning of a Wave 3 in a bull market.
The next commentary is Thursday (4/2).
Have a good trading day!
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