Haggerty: Significant Price Zone
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 finished +2.3% last week to 1087.91, after having made a new rally high of 1096.56 on Thursday (10/16). The energy sector led last week as crude oil broke off its trading range above 75, and has advanced 8 straight days to close at 79.96 on Monday. The USD declined -1.1% on the week, and that gave strength to the commodity sectors.
The $US dollar declined —0.3% Monday, and consequently the energy sector was the leader with the OIH +1.5%, and XLE +1.3%. It seems as if the world is short the dollar trade, and with most of the Fed Governors speaking this week the surprise might be a quick dollar rally that would squeeze some dollar shorts, and put pressure on the equity market.
NYSE volume was only 1.08 bill shs on Monday as the SPX made a new rally high at 1100.17, and closed at 1097.91. The current rally off the 10/2 1019.75 low at the 50DEMA zone, and 1018 minor support, has been on declining volume with negative momentum divergences, so it is obvious that the market continues to be driven by the declining $US dollar, which continues to hit new lows.
The SPX next key price zone is the 1121 .50RT to 1576 from 667, and with Monday’s 1101.17 high it is now in that zone. It is also extremely extended as the SPX is +20.5% above its 200DSMA as it enters the key price zone, so the odds strongly favor a short term reversal.
Have a good trading day!
Click here to find full details on Kevin’s courses including Trading with the Generals with over 20 hours of professional market strategies. Plus a free trial to Kevin’s daily trading service.