Markets Trade with Geometric Symmetry

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 5/11/12

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In the 4/23/12 commentary [No Reason Too Buy O/B Market with Negative Divergence] I included the SPX monthly chart which outlined the O/B 5 RSI monthly divergence at the 1422 high, which was +113% from the 667 bear market low [3/6/09] The hype at the time was extremely bullish for continuation, but from a technical view it was obviously a very low risk reward time to get long or increase equity allocations.

The SPX declined -4.6% from that 4/2/12 1422.38 high to 1357.38 on 4/10/12, and then bounced to a 123 Lower Top at 1415.32 on 5/1/12. The index finished last week -2.4% to 1369.10, which is the largest weekly decline so far in 2012.

Fast forward to this week and the SPX declined to 1343.63 on Wed, accelerated by the Greece fiasco, Spain, and the election of a far left “Nut Job” in France. That is a -5.5% decline from the 1422.38 high, and just above the 1340.03 3/6/12 low, and the 1340.34 .236 RT to the 10/4/11 1074.77 low, so it is a minor support zone.

Also, the SPX was obviously S/T-O/S at that 1343.63 level on the headline Euro news, making that 1343.63 low on the 10:25AM bar, and so was most everything else. It was a risk off opening as the dollar and bonds were up, while the SPX and commodities lower The Trading Service members had many extended VB trade opportunities to choose from, and I have included a couple of live trading examples [SPX, XME] from Wed.

The path of least resistance for the SPX is still down, and after any reflex bounce the SPX will most likely trend down to at least the 200EMA zone [1314] as the NYA, IWM, and TRAN have done. The end of May to the middle of June has time symmetry, so any further SPX decline into that period will most likely be the next good position trading opportunity with any worthwhile percentage gain opportunity, unlike the headline daily noise games.

You can download for free 6 of my calculators that I use to measure price and time symmetry at and the brand new 200+ page manual “Markets Trade with Geometric Symmetry” is also available on the site.

SLB20 chart

SPXMO20 chart

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