Market Anticipation and Current Price Zone
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 market continues to defy gravity since the “Generals Pullback” to the 1044.50 low, which was an anticipated key price and time zone. Once the 1121 .50RT from 667 to 1576 was taken out the probability was that the SPX would trade to at least the 1229 .618RT zone, and those odds obviously increased once it took out the 1150.45 previous cycle high.
However, I also anticipated that the SPX would pullback at least 5.0% before it could sustain a run to the 1229 zone once 1150.45 was taken out, but that hasn’t happened yet; as the SPX made a new rally high to 1191.80 on Tuesday.
Those of you that are regular readers of this “rag sheet” know that the previous key price zone was 1161-1163, followed by 1178-1180 which was a minor price zone.
The current price zone in play is 1191-1196, which includes the 1998 bull market top at 1191, the 1.414 Fib extension of the 1150.45-1044.50 last leg down at 1194.31, in addition to the 1195.24 135 degree angle measured from 667.
After hitting 1191.80 on Tuesday the SPX traded down to 1177.25 and was then marked up to the 1182.45 close in the last 45 minute.
Crude oil has broken out of a trading range above 83.92, and hit 87.09 before closing at 85.88 Wednesday, while the ^TLT^ made new lows below 87.84, and made an 87.30 early low Wednesday before rallying to the 88.73 close as the Treasury Auction was positive.
The 30-year and 10-year yields also made new highs with the 10-year note hitting 4.013% on Monday. The Fed was quick to try and jaw bone the rising interest rate fear as it gave us another one of the “keep rates low for an extended period of time statements”. It is nothing more then a finger in the dyke.
The sovereign debt crisis in Europe will get worse this year, and it will include Spain, Italy, Portugal, and Ireland, but the capital leaving those countries will most likely chase the U.S. Dollar, Gold, and maybe even U.S. equities.
However, down the road the U.S. will also have a sovereign debt crisis and that will be ugly. Short bonds and long gold remains a primary focus.
Have a good trading day!
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