Market Manipulation for Remainder of 2006
Kevin Haggerty is a full-time
professional trader who was head of trading for Fidelity Capital Markets for
seven years. Would you like Kevin to alert you of opportunities in stocks, the
SPYs, QQQQs (and more) for the next day’s trading?
Click here for a free one-week trial to Kevin Haggerty’s Professional
Trading Service or call 888-484-8220 ext. 1.
The PMI and ISM numbers reported below 50 on Thursday and
Friday were all daytraders needed to capitalize on the high-probability RST
reversal strategies with volatility band symmetry. There were 2 DIA RST
sells and 1 RST buy on Thursday, and then 2 DIA RST buy entries on Friday.
All were very successful. The first RST buy on Friday went from the 121.40
entry to 122.10, and the second one followed the 120.90 low with entry above
121.08, which was also the -2.0 VB. This trade ran to 122.05 and closed
there. The SPY had 4 RST setups during the same period. The
“mystery” rally in the last hour stopped the bleeding. The SPX was -16.5
points from the intraday 1402.41 high to 1385.97 on the 2:40 PM bar. The
RST entry was on the next bar above 1387.59, and that ran to the 1396.71 close.
The $INDU was -158 points to the 12090 low and reversed +104 points to a 12194
close. Once again, when there is significant news that can be a downside
catalyst, we get a sudden futures-accelerated buy program to the upside.
It’s getting to be a habit.
The SPX closed the week at 1396.72 (-0.3%), $INDU 12194
(-0.7%), and QQQQ 43.66 (-2.2%). NYSE volume on Friday was 1.71 billion
shares, with the volume ratio only 38 in spite of the last hour index spike, and
breadth -298, helped in part by the TLT (+0.3%). It was all about energy,
gold and the US dollar, and long-term interest rates last week. The XLE
was +5.6% and OIH +5.2%, while the $HUI finished the week at +4.7%, and the TLT
+1.3%. The semis and brokers led the downside with the SMH -4.4% and $XBD
-4.7%. The Federal Reserve tries to jawbone the US dollar up, but the bond
market has ignored it. The long-bond yield ($TYX) has declined -14.6%
(high to low) since 7/5/06, while at the same time, the SPX has gained +14.9%
from 7/18/06. The other primary benefit of the SPX advance off the 7/18/06
low was that crude oil (CL0701) declined -28.3% from the 7/14/06 high at 80.90
to the 58 low on 11/20/06. Crude oil has rallied +9.9% in 6 days, and
closed on Friday at 63.43. The next price zone is 66.75-67 then 69.45-70
(see chart). The OIH is leading crude oil just as it did on the way down
from the 5/14/06 169.75 high. The OIH has broken out of its .50
retracement range to the 169.75 high, hitting 148 on Friday, closing at 147.65,
which is +25.2% off the 10/04/06 118.19 low. That low was identified as
the key price and time zone in the trading service.
Ben Bernanke and Henry Paulson go to China in mid-December, so
a betting man would say that the PPT (Plunge Protection Team) is on notice to
act quickly ahead of any potential US dollar-induced 1987 major index
knife-down. The SPX is +11.9% year-to-date, and most of the big mutual
funds are just quasi-index funds, so there is a big incentive to finish the year
strong. That means traders will be able to capitalize on any interim
weakness in these first two weeks of December.
The US dollar had a low range from 80.34-78.19 (9/30/92) from
2/28/91-4/30/95. After an advance to 121 (7/31/01), the dollar hit 80.39
on 9/31/04 (thechartstore.com).
The dollar hit 82.36 on Friday, closing at 82.47, so it is testing that
historical low range, which will most likely hold. I think the government
will continue to rig the market when it suits their political and financial
purposes, especially until there’s a turnaround in the US dollar.
Have a good trading
day,
Kevin Haggerty
Check out Kevin’s
strategies and more in the
1st Hour Reversals Module,
Sequence Trading Module,
Trading With The Generals 2004 and the
1-2-3 Trading Module.
