Short Term Market Strategy
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.
In the previous commentary (Time Symmetry and Year-End Markup), I said that
December 5, 6 and 7th have significant time symmetry that could affect the
market in either direction, because the SPX was no longer in a key price zone
after rallying from the last time period and 1406.10 low. The SPX is +7.2% (low
to high) in 8 days from the 11/26 1406.10 low and last key time period. It has
now reversed into the extended short-term +2.0 Standard Deviation zone, with the
+3.0 Standard Deviation zone at 1525-1530, so the probability is for a downside
reversal from this extended zone before a markup into year end. The next key
time date is 12/14 (+/- 2 days). If there is a pullback into that period, it
will set up a good short-term rally.
The SPX was churning yesterday in that 1490-1493 resistance zone I outlined
in the previous commentary, until the President’s announcement on the new
interim subprime band-aid, which is a subprime interest rate freeze, for what
looks to be a minimal amount of subprime borrowers, with many restrictions. The
SPX made a vertical move on the 2:05 PM bar from a 1490.68 at a 1507.34 close (PPT?).
The homebuilders got squeezed, with KBH +16.1%, LEN +15.3%, PHM +12.7% and CTX
+12.7%. The market unanimously expects a rate cut next week, and discounted it
with the current advance, but it can still act as a catalyst for a markup by the
Generals into year end. For traders, a quick downside (air pocket) will set up a
short-term long index proxy position trade into year end.
The focus on the General’s big cap leading percentage gainers for 2007 has
been spot on for this rally, and that will continue into year end. Energy
continues to be the best daytrading sector, and the trend up day yesterday made
many traders happy in energy stocks, because most of them opened in-line and
provided First Hour strategy entries, such as Opening Reversals (SLB), Dynamite
Triangles (HES) and Flip Tops, to name a few. The economic numbers will continue
to be massaged by the US government, and the Fed will continue to jawbone the
$US Dollar, as it still grows the money supply (M3) at a record pace, and lowers
interest rates because they know that the real world economy is much more
negative than the reported economic world. A year-end rally is an opportunity to
significantly reduce equity exposure, and is a short opportunity for traders.
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
