PPT Is Masterminding the ‘Game’ This Week
Kevin Haggerty is a
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With General Petraeus testifying before the jackals in Congress, the SPX has
advanced +1.3% so far this week. President Bush also made a TV cameo, and the
SPX made a +7.6 point move starting on the 2 PM bar before closing at 1471.49.
The President addresses the nation on Thursday night, and there is also
unanimous expectation the Fed will cut rates next week, so my guess is the
positive “coincidences” will continue as the PPT will reverse any weakness today
and/or Thursday. If the expected rate cut plays out, “they” will push the SPX
higher, and that will set up the short side play again if it is an aggressive
move.
The M3 (money supply) has been growing at double digits for quite some time,
so the Fed acknowledges the current problems, and in the end, the Fed has always
“inflated” its way out of problems by printing the money. The $US Dollar made
new lows for the third straight day at 79.60 before closing at 79.68. Gold
advanced and remains above 700, while crude oil made a new high close in NY to
$78.23. If the Fed decides to cut, you know the subprime credit and housing
problems are worse than expected, because it will put pressure on the $US
Dollar, which can force foreign selling of $US Dollar denominated assets.
NYSE volume was light and finished at 1.3 billion shares yesterday, but
didn’t hit 1.0 billion shares until 3:20 PM, so it was much easier for the
“gang” to push the SPX higher. The sectors were up across the board, and just
the TLT was red at -0.1%. The TLT hit an 81.56 low on 6/12/07 and has advanced
+11.5% to yesterday’s 90.93 close. On the contra side, the $XBD topped out on
6/1 and declined -20.6% into the 8/16 low, while the XRT (retail ETF) topped out
on 6/4 and has declined -20% into that same 8/16 low. The homebuilders (XHB),
banks ($BKX) and real estate index (IYR) all hit their cycle highs in the first
week of February. Since then, the XHB has declined -43%, IYR -30% and $BKX
-17.2%, all into the same 8/16 low. These are all now early barometers to
identify any change in perception by the Generals.
The SPX closed at the high of the range yesterday, and the SPX futures are -6
points as I complete this at 8:30 AM, so the odds favor an upside contra move if
the futures hold and there is a discount opening. Unless the market turns its
focus to the new lows in the $US Dollar, the PPT (Plunge Protection Team) will
keep this market from selling off much before the President addresses the nation
on Thursday, which precedes any Fed rate cut action next week. The best
short-term index short opportunity will be on any futures-induced rally, should
the Fed cut rates.
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