From 1990 to 1997, Kevin Haggerty served as Senior Vice President for Equity Trading at Fidelity Capital Markets, Boston, a division of Fidelity Investments. He was responsible for all U.S. institutional Listed, OTC and Option trading in addition to all major Exchange Floor Executions. For a free trial to Kevin’s Daily Trading Report, please click here.
Commentary for 9/22/11
There was a lot of build up hype for the so called “operation twist” that the Fed announced yesterday, but there was little credibility by many about how effective it will be. However, the Fed also said there is significant economic and financial risk to the US and global economy, so that was more dire than his previous statements. Net-Net there was little to take positive from the FOMC statement.
Europe is the primary headline news risk while US debt and the USD have rallying with Gold because we are dealing with a flight to quality internationally as capital flees Europe. The IMF and ECB are brain dead and they are imposing the very same sanctions that created the great depression, and the PIIGS will not be able to pay off the debt anyway because the imposed austerity measures are shrinking their GDP and economies, there defaults [not just Greece] are inevitable, which you have been reading in this column from day one.
In the commentary for 8/23/11 [ Recession Denial and Market Reality] I mentioned the heavily weighted evidence that there is a global recession, and the very real fear of a European banking crisis that would no doubt touch US banks at some point. I also said that the “odds still strongly favor the 1101.54 low getting taken out, especially when denial becomes reality about the recession that we are already in”.
The SPX was -2.9% yesterday, but -2.2% of the decline came in the last 50 min as the SPX declined from 1193.61 to the 1166.76 close after the initial FOMC reaction on the 2:20PM bar from 1200.13 to 1183.33, followed by the bounce to 1193.61 and then the knife down to 1166.76, which was no doubt accelerated by the high frequency trading gang.
As I complete this commentary the SPX futures are minus 39 points relative to fair value following the big down in the European indexes, which were all off over -4.5% with the CAC40 down almost -6.0%. Bottom line is that all of Europe and Asia were significantly red.
The low close of this bear cycle so far is 1119.46 with the intraday cycle low at 1101.54 which is right at the .382RT to 667 from 1576 and if it breaks that the odds favor the .50RT to 1019, with the .618RT at 936. However, day traders will get mulitple -2.0 VB + trading opportunites this morning
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