Stock market in voter’s hands
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?
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The SPX has declined over 25 points the last 5 days after
hitting a key retracement level to 1553 in addition to being extended beyond the
long-term standard deviation zone, and also intermediate term overbought.
The intraday low Friday was 1360.98 before closing at 1364.30 (-02%). This
was in spite of the anticipated effort to paint the economic numbers good before
the election. November 3-6 is also a minor time zone, not to mention the
potential fallout from the midterm election results. Volatility is
expected. The extended SPX level is not conducive for significant election
disappointment. The generals have been selling health care and defense
stocks in front of the election, in anticipation of a house victory for the
left.
There was no real selling pressure on Friday, with NYSE volume
1.51 billion shares, volume ratio 44 and breadth -259. The SPX and $INDU
have pulled back to their 20 -dema with 5-RSI below 30, at 28.09 and 25.83,
which is the first time we have seen this since the July lows. The early
futures are green, so maybe the "PPT" (Plunge Protection Team) is going to paint
the tape green before the election from a short-term oversold condition.
Last week it was gold and energy up, with retail, transportation and semis
leading the downside. The CRB has been trading in a range between
360-399.90 since April. It closed Friday at 393.34 and is pushing another
all-time high above 399.90. This will support the low growth/high
inflation scenario, and that is obviously not good for the equity market.
Traders are better served in a reaction mode until after the election. The
SPX futures are +4.75 points in Globex, so the SPX upside retracement levels are
1375.21, 1378.57 and 1383.35, in addition to today’s VB, available on the
trading service.
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.