Key Market Juncture For the Major Indexes
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 hit the key 1010-1015 price and time zone on Friday with a 1018 intraday high and 1010.48 close. As you know from previous commentaries, this was the expected initial move when the SPX broke out of the 923-950 trading range and inverted H&S pattern. However, before the B/O I had expected at least a .382RT to 667 from the 956 Wave 1 high, which was 846, but that fell short as the SPX only made a .30RT of -9.1% to the 869 right shoulder low, followed by the B/O above 956.
It was also expected that a B/O of 956 would force the “herd” into the market in fear of missing Wave 3, seeing that they had already missed the key price zone that started this bull cycle within a secular bear market. The major indexes have now hit significant RT zones to their bull market highs as the SPX, INDU, and NYA, are all at the .382RT zones to their 2007 bull market tops. The QQQQ has been a leader, and is right at its 39.82 .50RT and down trend line to its 54.69 Oct 2007 bull market top, as is the COMPX. The IWM and TRAN are also just below their .50RT zones.
With the major indexes at key RT zones relative to their bull market highs, it is obviously a significant short term market juncture, especially because the market is so extended in price relative to time since the 869 low, and also because of the negative 5RSI momentum divergences in the major indexes.
 I still think that the higher probability is for the SPX to pullback and test what is now support at the 956 zone, and that the next 5.0% move or more is down, not up.
Have a good trading day!
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