Negative Euro Cycle News a Positive for Traders

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 7/24/12

The SPX finished last week +0.4% to 1362.66 after the -1.0% day on Friday, but it had rallied +4.1% from the 1325.41 low on 7/12/12 to the 1380.39 high last Thursday, after hitting the S/T-O/B zone on Wednesday with the 4DMA of the VR and BR at 65, and 64, while the 5 RSI was 75.10 after 3 straight up days.

The last 3 legs of the advance from 1266.74 have topped out with the 5 RSI at 78.50, 77.07, and 75.10, while the two pullbacks have held above 30.0 [31.61 after 6 straight down days] on the 5 RSI.

The European markets were down significantly yesterday with the SPX futures -20 points and a spike in the US Dollar, so all commodities were in the red led by Crude Oil at -3.9%, while bond yields made new lows and the Spain 10 Year yield was 7.40% . Spain and Italy also banned short selling in stocks. This set the obvious framework for day traders yesterday.

The US major indexes all had meltdown openings yesterday to their -2.0 VB`s and below, as did the commodity ETFs, while the UUP and TLT had the expected significant gap-up extended VB openings.

The SPX had an opening bar low yesterday of 1341.39 versus the -2.0 VB at 1342.20, and the previous 1362.66 close. The first signal reversal bar was the 1337.56 low, with the low common denominator entry above 1338.97. The SPX contra move from the extended VB went trend up all day to a 1353.25 high and closed at 1350.52, as the UUP went trend down. Trading Service members don`t miss those kind of bonus trades, and with a free 1 Week Trial Membership to the TS you will see why they don`t.

The XLE was also a -2.0 VB decline on the opening bar, and hit 66.92 on the 9:45AM bar versus the -3.0 VB at 66.63, so the signal bar entry above 67.06 was a no brainer for TS members. The XLE made a trend up 68.27 intraday high, and closed at 68.13.

There were -2.0 VB opportunities yesterday in the other major indexes, commodity ETFs, and some of the TS focus list stocks, so a good day was had by all thanks to the acceleration of the Euro news cycle, which is good for the day trading business.

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