Take Some Money Off the Table and Raise Stops
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.
The Generals marked up stocks into month end yesterday as the SPX advanced +2.2 to a new high close of 873.64, and new intraday high at 882.06 NYSE volume was on the lighter side at 1.48 bill shs, with the volume ratio 89, and breadth +2062. It was a broad advance as all sectors finished green, and only the TLT (-0.9) and USD (-0.7) finished red, while crude oil (WTIC) was +2.2.
Today is month end, and the SPX futures are indicating a strong opening, so the Generals will try to take the index higher. The anticipated SPX 882 .236RT to 1576 from 667 gave day traders a bonus trade yesterday. The intraday high was 882.06 after the FOMC spike (no valid reason) on the 2:25 PM bar, and the reversal bar short entry below 880.35 declined to 868.21 on the 3:45 PM bar, before a MOC (market-on-close) bounce to the 873.64 close.
Bernanke said nothing yesterday that he hasn’t said before over the last 4 weeks as he continues to jaw bone the economy up with optimistic remarks about an early end to the “recession”. Problem is “Mr. Ben”, that doesn’t solve the derivative meltdown, and so far the banks are still not lending so Geithner’s toxic asset problem can’t succeed until that happens.
The key price zone in play now is the 882 .236RT to 1576, and a few angles up to 889 measured from the 667 3/6/07 low. This is the first significant Fib RT zone, because it is to a previous bull market top, and just a previous swing point high like 944 (1/6/09). The Wave 1 high following the 769 10/10/02 bear market low was 954, which was also the .236RT to the 1553 3/24/00 bull market top. Position traders that bought this market in March at the 665 .618RT to the 1982 low and then the reversal of 741 and 769 should be taking some money off the table, and tightening stops on the balance.
There is also some minor time symmetry next week. There will be a Fib correction to 667, and after that higher trough investors will have to buy the Wave 3 leg above the current rally high which is not in yet. This will not be a “V” recovery in the market or the economy, despite the political spin and “midnight madness” hype by CNBC.
Have a good trading day!
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