Market is on Pace for Anticipated New Lows Into the Sept/Oct Period
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 8/24/10
The SPX finished last week at -0.7% to 1071.69. It made a high at 1100.14, a weekly low at 1063.91, and it closed yesterday with a lower close at 1067.36, but not a lower low than 1063.91.
The leadership last week was the TLT at +3.7, and Gold with the HUI at +2.8 while commodities led the decline because the USD reversed to the upside and XEU to the downside. The XEU made a 10 day low yesterday to 126.47 and closed at 126.57. The USD made an 11 day high to 83.12, and this correlation has continued to put pressure on the equity markets and commodities. The XEU is now trading below all of its EMA’s, while the USD is above the 200DEMA and all of its EMA’s.
The double dip/deflation scenario is now the in thing for the “herd”, and is without question a very late reaction to what a few non-partisan professionals have been saying since day one of this alleged recovery. You can’t believe anything that is coming out of Washington, but now the situation is so bad, there is no place for the spin misters to hide, because the economic numbers are too bad for even the Government to hide.
The Volume has been weak in either direction but the market is at a point where it neither looks ahead or behind, and the news at hand is all that seems to matter, and traders, hedge funds, and investors react accordingly. This kind of price action has taken its toll on hedge funds as it is very difficult to make any money from position trading. Many of them will close this year unless they are bailed out by a good year-end rally starting sometime in Nov.
I still think that there will be pressure on the equity market into the Sept/Oct period, and that the SPX 7/1/10 1010.91 low will get taken out before any rally into the Nov/Dec period. There is some longer term Fib symmetry in the 8/27-8/30 period. There is also short term Fib ratio symmetry on 8/28 which is the 2.236 Fib ratio of the 5/28/10 SPX 1040.7.8 low, and the 7/1/10 1010.91 low.
Members of the trading service took advantage of three different SPX long day trading opportunities from the 1070 .50RT zone from 1129.24 to 1010.91, but as I complete this at 8:40AM the SPX futures are at -12.60 to 1053, and crude oil is trading at 71.33, so it looks like the SPX at 1056 .618RT to 1010.91 from 1129.24 will be in play this morning. Any break and close below 1056 will mean that the higher probability is that the 1010.91 7/1/10 low will get taken out after the next upside S/T-O/S bounce.
Have a good trading day!
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