No Short Term Bias for Traders
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?
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It was a week in reverse for the SPX, as it finished -4.7% to 1331.29, versus
the +4.8% close at 1395.41 the previous week, which was at the key price zone in
play. The financials led the downside on the week, with the $BKX -8.6% and $XBD
-8.3%, but this does follow significant gains from the prior 2 weeks of +21.9%
and +17.9%. The SPX hit the 1316.75 weekly low on Thursday before closing at
1336.91 that day on an RST trading reversal from the 1318 level which was the
.618 retracement to 1270 from the 1396 high (2/1/07). It went out Friday on an
inside day at 1331.29 (-0.4%). NYSE volume was on the low side at 1.45 billion
shares, with the 4 MA of the volume ratio now 35 and breadth -618, which is
approaching the short term oversold zone.
The USO bounced off the bottom of a 4-month trading range Friday between
79.09-68.30 to close at 72.90 (+4.3%), but there were still some contracted
volatility setups after the gap up openings for daytraders to play. There wasn’t
much for daytraders in the major indexes until the 1:40 PM lows, which triggered
the RST reversal strategy in the SPX when it ran from 1322.85 entry level (5-min
chart) to the 1336.37 high on the 3:45 PM bar before closing at 1331.29. The DIA
RST entry was above 121.28 and it ran to 122.32 before closing at 121.75.
Traders should expect more volatility this week, as there is a confluence of
time symmetry. The SPX remains in a neutral price zone, as the .618 1318 level
held last week, so a 1-2-3 higher bottom reversal can still kick in, just as
easily as a decline taking out the 1270.05 low. A high probability trading
opportunity is best when there is both a key price and time zone in play, and
there is either an oversold or overbought condition. At the SPX 1331.29 close on
Friday, there is neither of those, so it is a daytrader’s market, not a spot for
a short term position in either direction, because there is no high probability
edge. For longer-term players, there is nothing that I see yet to indicate that
the market will not take out the SPX 1270.05 low before this bear cycle is
finished.
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.
Have a good trading day,
Kevin Haggerty