Key Market Timing Alerts

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.

Commentary for 4/19/11

The previous commentary was for the week ending 4/8/11, and the SPX closed -0.3 on the week to 1328.17, and last week it went out at 1319.68
[-0.6], after a 1302.42 low last Thursday following the 2 day sell off in commodities after the GS call to take some money off the table in oil.

Crude oil [WTIC] went from a 113.72 high to a 105.65 low on 4/13/11 and bounced to 110.43 last Fri before closing yesterday at 107.50 The GS call created volatility for day traders on the downside for two days last week, followed by three straight days up on light volume.

The market took a hit on Mon of this week as S&P stated the obvious about the negative watch on US debt, which is really not new news at all, but the nervous market reacted with emotion and the SPX traded down to a 1294.70 intraday low, which was below the -2.0 VB zone, and just above the -3.0 VB, before closing at 1305.41 [-1.1%], after the bounce to 1307.39 Suffice to say traders that use my Volatility Bands to trade extended volatility strategies had a good day, as they did for the entire previous week.

In my opinion, the reaction to the S&P negative watch news was more of a “Risk On” reversal reaction which was selling stocks and commodities and buying the USD, in addition to gold which has made another new nominal high. Gold continues to rise because of political instability and the debasing of the USD. You can`t print or monetize gold, so there continues to be a strong global desire to hold gold and sell US Dollars. I read the other day about a Texas Investment firm buying gold bars in their endowment fund, and we will see more of that going forward. The political hacks continue to flounder while the US burns.

The IWM and MDY have taken out their Feb highs, and are now consolidating at their 50DEMA`s, and did not trade below it on Mon as did the SPX down to 1294.70, versus the 50DEMA at 1308.08, and closed at 1305.41 The INDU 30 traded below its 12146 50DEMA on Mon, but closed above it at 12202, but had previously taken out its Feb highs. However, the most important index, which is the SPX, has not taken out its 1344.07 2/18/11 high yet, and the divergence is a red alert.

The defensive sectors like the XLP. PPH, and IBB continue to make new highs during this last rally, while the Techs and Financials [XLK & XLF] are both trading below their 50DEMA`s, and are a current drag on the market. It doesn`t help when previous market/industry leaders like GOOG and GS are trading well below their 200DEMA`s, and both peaked out in Jan 2011. Also, AAPL has made two lower highs since the 2/16/11 364.90 high, and made a 320.16 low Mon versus the 50DEMA up at 340.40.

In the Trading Service commentary for 4/18/11 [Mon] I outlined some significant time symmetry for the last week of this month, and mid June, which is the most important date since the 3/6/09 SPX 667 bear market low. You can access this information by taking a free one week trial to the Trading Service, and clicking on the Commentary Archives 4/18/11 date.

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