High Probability Strategies
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 817.04 low on 1/15/09 was extended to the -2.0 STDV Channel band with the .618RT to 741 from 944 at 818.64. It was a key price and time zone and the internals were all ST-O/S. It rallied to close at 843.74 that day and then topped out the next day with an 858.13 high and 850.12 close.
Tuesday was the first trading day after the long weekend, and also “Coronation” day, but the result was a mini-meltdown with the SPX finishing -5.3 to 805.32, which is the worst one day decline in Inauguration history. The banks had been in a sharp decline for the previous 5 days, and on Tuesday it was a meltdown led by State Street
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STT |
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PowerRating) at -59, Bank of America
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BAC |
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PowerRating) at -29 to 5.10, and Citigroup
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C |
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PowerRating) at -20 to 2.80. Both C and BAC look like they are soon to become subsidiaries of the new socialist empire in Washington D.C.
The SPX STDV Channel chart (30 Day-30 Minute) is for 1/20, so you can see how extended the market was coming into yesterday. It could obviously also get more extended on continued weakness to the -3.0 STDV band at 785, which is also the .786RT from 944 to 741. Trading service members were ready in either direction.
The futures were up in Globex trading with International Business Machines
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IBM |
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PowerRating) announcing “better than expected” earnings after the close Tuesday, and this resulted in a gap up opening yesterday. The SPX traded up to 823.22 on the 9:55 A.M. bar from that 804.47 previous low. This set up the 1st Hour Trap Door reversal strategy, with entry below 820.80 on the 10:05 A.M. bar and it traded down to 804.63 which set up the 123 Double Bottom opportunity with entry above 807.15 which ran to 841.72 and closed at 840.24 These are both strategies from the Trading Modules, and you can learn more with a free trial to the Trading Service. It was obviously a good trading day for members regardless of whether they took one, or both defined strategy trades.
Once the 818.64 .618RT got taken out, and with the accelerated capital problems for C and BAC, it has significantly increased the risk for more downside. The market reversed most of the previous SPX -5.3 decline as the SPX went out at 840.25 (+4.4) yesterday, led by energy, and significant short covering in financials after the severe 6 day decline. NYSE volume expanded to 1.74 bill shs, with the Volume Ratio (VR) 89 and breadth +1925.
The C and BAC capital problems have obviously spooked the market, and if the so called stimulus proposal is all borrow and spend, spend, spend, with significant control by the Government, which crowds out private investment, then the market can easily make new lows.
Have a good trading day!
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