Key price and time zones
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The SPX remains in the same
5% trading range since 6/6/06, closing yesterday at 1270.92, -0.5%,
as did the $INDU to 11,126. Technology led the downside, with the QQQQ -1.7%,
and $COMPX -1.4%. The SMH (semis), which had advanced six straight days (+7.8%)
was -2.7%, failing again at the 31.50 – 31.75 initial resistance zone. Gold led
the upside, with the XAU +2.5% and OIH +0.5%. The brokers
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were both -1.1%. NYSE volume was not heavy at 1.65 billion shares, with the
volume ratio 37 and breadth -742. The 4 MAs of the VR and breadth are neutral at
50 and +204, which reflects the trading range action.
Momentum traders are having trouble adjusting to a trading range action, but if
you cannot adjust, don’t trade. The moves are smaller and of shorter duration in
this kind of a market. There is lots of perceived good news/bad news price
action. The indices can be muscled through the futures intraday by some of the
major institutions/hedge funds at vulnerable levels. However, that is not the
case with the primary trend. The unknown factor is how much the Federal Reserve
uses the PPT (Plunge Protection Team) as one of its market tools when there is
any kind of significant negative news that makes the SPX vulnerable.
The New York Post, to their credit, has
filed under the Freedom of Information Act to get any reported information about
the PPT. I would assume there is not much of an audit trail on the activities of
the PPT, but it’s a start.
Despite the SPX/$INDU trading range action, energy, copper and gold stocks like
Newmont
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excellent trading opportunities in both directions. If you only trade the index
proxies/futures, it has been slow going, so try and concentrate more on the
commodity stocks. The SPX made a 1265.71 intraday low yesterday and the current
minor support is 1263Â – 1260, with the 200-day EMA at 1261. There is a
time cluster for the five trading days from 8/2 – 8/8 and then 8/14 – 8/16, so
expect volatile price action. Considering the declining SPY volume on this
recent advance from 122.39 to 128.14 last Friday, the highest probability is
down. If the SPX breaks the upside trading range boundary, expect a reversal
from the 1285.67, 1290 or 1295 levels.
Have a good trading day,
Kevin Haggerty
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