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 8/13/12
The SPX was +0.2% to 1405.87 on Friday for the 6th straight green day, and was +1.1% for the week. The NYSE and Composite volume has melted down, as has the SPX implied volatility – which is only 12.90 today – versus the 52-week 12.25 low. Lack of selling pressure, light volume, and reduced liquidity, made it easy for the VWAP algorithms to creep the SPX higher last week.
The weekly average volume at 630mm shares is the lowest weekly average all year, and Thursday and Friday were “death valley” volume days with NYSE volume of 576 and 561mm shares. The Composite volume Friday was only 1.5mm shares versus 2.7mm shares on Thursday. However, there were multiple trading opportunities on both days of anemic volume.
The market remains in the S/T-O/B zone at 77.68 and the SPX hasn`t advanced 6 straight days in this entire +11.0% rally from the 1266.74 [6/4/12] key price and Pi time zone low, so my technical bias is negative for the week.
The Draghi jawboning 2-day short covering rally of +1.7 and +1.9% [8/2-8/3] has lost its luster while the question sinks in as to why is it positive for the ECB to greatly expand its balance sheet by purchasing the debt of Spain and Italy, as it will only server to weaken the ECB and do little or nothing to resolve the real problems of those countries.
Despite the extremely low volume and lack of trading volatility in the major indexes, there were still some defined basic strategy opportunities in the commodity ETFs on Thursday like the 1st CBOs in XME, and XOP, whose charts I have included. However, there were also similar setups in SLB, NBL, and APA, in addition to the OIH and XLE.
On Friday there was a -1.5 VB setup at the 480EMA for XOM, in addition to the Opening Range B/O in GLD, and the 1st CBO in NBL. Just as on Thursday, there were other similar defined Basic Strategy opportunities.
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