No Trading Edge After the Mark-Up
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.
It was a strong month-end markup and first few
days of February, new money. This was helped in part by the FOMC’s “all is
well with the economy” statement, that just happened to coincide with the
President’s speech on the economy. The Fed was certainly looking through a
different hour glass than they did 4 weeks ago. The SPX went out at a new
closing high of 1448.39 +0.2% on the day and +1.9% for the week. The QQQQ,
which has some weekly negative momentum divergences, closed at 44.16, +1.3% for
the week. The internals were neutral on Friday, with the volume ratio 56
and breadth +535, but the 4 MA’s are short-term overbought with the volume ratio
69 and breadth +1241. NYSE volume on Friday was 1.43 billion shares, which
was the low for the week, and the daily range on Friday was just 4.8 points.
In the sectors, energy continued its rally with
the OIH up for the third week in a row, and is +10.8% the past 15 days, versus
the SPX, with all the hype, just +1.7% the same period. Our primary energy
focus was rewarded, as it is most often from key price and time zones, which can
be anticipated. When you put yourself in the highest probability
situations all the time, your chances of beating the “casino” are significant.
The light crude oil contract ($WTIC) closed Friday at 59.02, which is +15.7% off
the 1/17/07 51.03 low. The initial resistance is 58, with the 200 dema at
62.64. There was some strange trading in the $TRAN last week (+6.2%), as
it went from 4788 to a 5032 high in 3 days from 1/31-2/2. It closed Friday
on 5006.89. This was in spite of the sharp increase in crude oil.
The $TRAN had declined from from 4861 to 4687 as crude oil reversed off its
51.03 1/17/07 low. One component of the index, CHRW, was +23.2% the past 3
days, on a positive earnings surprise and upgrade. Once again, the herd
chases and the shorts cover. The price action of the $TRAN is significant
right here to those who follow the Dow Theory, and a close and hold above 5014
will give them their confirmation of the $INDU cycle high.
The QQQQ is the weakest of the major indexes, and
has some obvious weekly negative momentum divergences, as do the $INDU and SPX.
I have included the QQQQ weekly chart, and you should also review the $INDU and
SPX weekly charts with the same indicators. From mid-February through most
of March there are some key time periods, and volatility should increase
significantly from the 52-week lows where it is currently trading. The SPX
is up 4 straight days, so daytraders have no edge right here, until some of last
week’s markup is worked off.
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.
