No daytrading heroes needed the last two days of 2005
Kevin Haggerty is
the former head of trading for Fidelity Capital Markets. His column is
intended for more advanced traders. Kevin has trained thousands of traders
over the past decade. If you would like to be trained by him,
ext. 1.
The SPX opened to the
upside on Tuesday, hitting the intraday high of 1271.83 on the first
bar and then the red knife down started on the 11:20 AM bar. It was a surprise
trend down to an intraday low of 1256.74, where it closed. NYSE volume was
only 1.15 billion shares but there were no Generals stepping up to reverse the
decline and it remained that way through yesterday, as the SPX closed at
1258.17, +0.1%. Since the 1254.64 Tuesday low on the 1:50 PM bar, the SPX has
treaded water between 1261.10 – 1254.64.
There are two trading days left, but the expectation was for a push higher in
price the first couple of days, and then see the Generals hold the levels on
Friday. I expected them to at least get the SPX above +5% on the year after the
current rally that we’ve had, which although not great, beats the 1168 (10/13/05
low) 51 days ago. The SPX is now just +3.8% YTD and I must emphasize, has a very
weak technical outlook to at least the Fall of 2006 to early 2007 regardless of
what the yield curve does or does not do. The only question is whether the SPX
Wave 5 gets extended to the anticipated symmetry above 1275.80 (outlined in
Inner Circle). The risk of a significant percentage decline far outweighs a
nominal percentage gain above 1275.82 and that is why this corner has taken the
preventative action that is has, which I referred to in previous commentaries.
Maybe if Iraq and Iran went away and crude oil went South big time, the game
will continue. Why do I think that is not so realistic? 2006 is a mid-term
election year and that’s where we saw market bottoms in 1990, 1998 and 2002.
Trivia yes, but it tilts probability.
Keep you powder dry today and tomorrow and
better yet, take the two days off.
Have a good trading day and have a Happy New
Year,
Kevin Haggerty