Market at Key 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 SPX made a 879.61 intraday low on the 2:55 PM bar yesterday versus the -2.0 Volatility Band at 878.42, and bounced in the last hour to close at 888.50. It also held the current trading range low of 878.94 (5/15). The Wednesday 924.60 high hit the key 923-950 zone again for the 4th time in the last 15 days, and day traders in had positive short trades each time. The 1998 bear market low is 923, and the current SPX 200DEMA is 946 while the previous trading range high of 875 is now the initial support zone.
The SPX made a 930.17 rally high on 5/8 before declining to 878.94 and then a bounce to 924.60 on Wednesday. This has set up a probable 123 Lower Top pattern with 878.94 as the 2 point low, and a significant break below the 2 point will be the anticipated Wave 2 Fib correction to the 667 low, with 830 being the initial .382RT zone, followed by the .50RT at 799, and .618RT at 767.
Figure 1: SPX Chart
The INDU has formed a 123 Double Top with the 2 point at 8230, and support at 8200, so it is also at a potential inflection point as it closed at 8292, after bouncing off an 8221 intraday low. The other major indexes have similar potential 123 LT patterns as the SPX and so does the OIH, XLE, IYF, and IYT, all of which hit their 200DEMA zones. There is obviously no edge for position buyers at current levels and it is best to let the market come to you.
Figure 2: IYF Chart
Figure 3: IYT Chart
The calamity in Washington continues, and you can’t believe anything that comes out of their mouths, let alone act on it, so the best course of action is to protect or take some profits into the spin exuberance, and then wait for pullbacks to key price zones for a higher probability opportunity, but forget about the “I might miss it” mistake, because there is always another chance to play in the game.
Have a good trading day!
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