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 9/17/12
The SPX had a +2.0% day last Thursday and closed the week ending 9/7 at +2.2% to 1437.92, which was the last commentary. The index was -0.1% last week until the overt FOMC decision on Thursday when the SPX spiked +1.6% to close at 1459.99 after going vertical on the 12:30PM bar. It made a 1463.76 intraday high on the 2:25AM bar versus the +3.0 Volatility Band at 1467.60. Crude oil traded above $100, the Euro above 1.30, while the US dollar made its lowest low since 4/30/12, and the GLD traded above 170 versus its 5/30/12 148.53 low.
The overt announcement by Bernanke was that the Fed would institute an open-ended QE 3 by purchasing $40 billion per month of agency mortgage-backed securities. It also said it would extend the zero rate interest policy through 2015, and he even made a comment that it would reduce the deficit and debt.
Bernanke also said that this action would stimulate employment, the housing sector, in addition to the economy, all of which he expressed is now a grave concern. It just so happens it is now a grave concern with only 54 days left until the election, so it is a blatant political gift to Obama who kept him in office, as Romney has indicated that Bernanke would be sent packing in 2014 if he is elected.
The QE 3 is an unprecedented decision, and so far nothing the Fed has done has noticeably stimulated the labor market, housing, or any significant economic activity. The primary benefactor from QE 3 will be the major banks that are lined up and drooling in anticipation of selling their ugly toxic assets [MBS] to the Fed. The odds are that the employment picture, housing sector, and economy will not significantly improve as a result of QE 3. It sure as hell hasn`t worked for Japan the last 20 years, and so far not for the US.
Bernanke`s decision will continue to devalue the US dollar resulting in rising commodity prices that will continue to inflate food, clothing and electric prices, in addition to consumers paying at least $5.00 per gallon for gas at the pump. Seniors will continue to get a zero return on the money market funds etc. The stock market will advance and continue to have a Bernanke Put, but the “herd” will be proven wrong as always, and the end of this fantasy market will not be pretty, as it is not based on reality.
The SPX is O/B on a daily, weekly, and monthly basis, but the Fed decision is and unprecedented, so the market can obviously get pushed higher into the election. Many under weighted money managers will play catch up going into year end because the Fed decision has forced many market investors to jump into higher risk assets, so those that do will end up getting caught at the top as usual when the music stops playing.
There is some geometric triangle time symmetry next week using the triangle formed by the SPX 4/2/12- 6/4/12 leg [1422.38-1266.74], and the 10/11/07-3/6/09 leg [1576-667] The is also Pi cycle symmetry in early Oct measured from the 3/6/9 SPX 667bear market low. It is most significant when the market is in an O/B or O/S condition, so any pullback next week should not be a surprise based on the O/B condition. However, the Fed`s decision will most likely prevent any significant pullback as the “herd” will be quick to jump in.
It wouldn’t seem like it to many day traders that just focus on the major indexes, but there have been multiple “High Probability Low Stress Day Trading” [Title of my next Day Trading manual/course] opportunities for the week ending 9/7, and also last week.
The SPX B/O to new highs on the Bernanke open ended announcement Thursday, and most every trader played some index or commodity ETF long on the 12:30PM bar. They were obviously rewarded as the SPX etc. went vertical. Most members of my Trading service also jumped on the +1.5 VB SPX short following the 10:20AM bar 1074.48 high as they sold the extended volatility VB with an 88% probability as opposed to the run on Thursday to almost the +3.0% VB, because of the Fed decision.
You can download for free 6 of my calculators that I use to measure price and time symmetry at www.geometricmarkets.com, and my new 200+ page manual “Markets Trade With Geometric Symmetry” is also available for purchase on the site. It doesn’t matter whether you are a trader, investor, portfolio manager, or analyst, because this product will enable to pinpoint high probability reversal zones in any market, including Stocks, Bonds, Commodities, and Currencies.
Click here to find full details on Kevin’s courses including Trading with the Generals with over 20 hours of professional market strategies. And for a free trial to Kevin’s daily trading service, click here.