Probability is on the buyer’s side
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.Â
The SPX finished the day at
-1.0% and is -2.7% for three straight down days. The $INDU (-0.8%) is
also -2.7% for the same period while the $COMPX has declined for eight straight
days to 2072 and was -0.9% yesterday. The QQQQ closed at 37.25, -0.4%, and
also down for eight straight days. NYSE volume expanded to 2.3 billion shares,
with 1.9 million down and just 367MM up, for a volume ratio of just 16 and
breadth, -1771. The 4 MA of the volume ratio was 27 and for breadth it is -1074.
The 5 RSI is 14.9, and in fact, 15 of the 30 Dow stocks have 5 RSI <=20. There
was lots of program selling yesterday, option expiration activity and some good
old-fashioned Generals selling.
The short-term SPX OS rally will test the 1256 –
1263 zone which is the 233 – 200 day EMA zone. This is the obvious first
resistance. The immediate upside alert to any short-term oversold rally is 1231
and for the $INDU it is 10,738. The $COMPX is at its extreme EMAs, which are
2100 and 2059. It closed at 2072. The 233 – 200 EMA zone is up at
2212 – 2224. The QQQQ has symmetry at the 37 level, so if there is to be an
oversold rally this is the most likely zone for all of the major indices.
Yesterday was a double minor time date with a
natural square number of trading days from both the SPX 5/8/05 1326.70 high and
the 4/20/05 1136.15 low. Couple that with the short-term OS and the probability
of a quick reversal is high. Continued triple witch activity on the sell side
into Friday will just delay it, not stop it. The weekly chart included today
indicates the probability is on the buyer’s side, not sellers.
Have a good trading day,
Kevin Haggerty
