The Consistent 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.
As anticipated, the market rallied into the President’s speech, with the SPX
hitting a 1489.59 intraday high before closing at 1483.95 +0.8%. The reversal
from the 1485-1516 price zone last week (SPX 1496.40 high) hit 1439.29 on
Monday. With General Petraeus giving testimony to the mostly civilian jackals in
Congress on both Monday and Tuesday, the PPT wasn’t going to have the market
declining during the testimony, especially with the President’s speech
addressing the nation on Thursday, so like many times before, the SPX was pushed
higher. I have kept a record of these “positive coincidences” since the 6/14/06
1219.29 SPX low, and I am absolutely amazed at the near 100% correlation.
NYSE volume was the lowest this week at 1.27 billion shares yesterday, with
the volume ratio 72 and breadth +559. The oversold sectors like the $XBD +2.6%,
RTH +1.4%, $BKX +1.3%, $TRAN +1.3% were the leaders, so there was significant
short covering in front of the widely expected rate cut Tuesday, in addition to
whatever real buying there was by the Generals. There are a few of our venerable
mutual funds that love to run the shorts in when sectors get extremely oversold
like the ones mentioned above. That is, of course, until the “buying the dips”
fails a few times, and then the “herd” all race for the exits at the same time,
and we get a real buying opportunity.
The trading focus continues to favor the energy, industrials, commodity and
selected technology stocks. The underperformers, and consequently, the short
candidates on pullbacks to declining EMA’s have been in the brokers, banks,
retail, homebuilders and consumer discretionary stocks. In the major indexes,
buying extended weakness and selling extended strength using the Volatility
Bands and Standard Deviation Bands (20-day, 3 months) has been the best way to
catch short-term swings, especially from high probability price and time zones,
provided you understand how to identify them. At 8:45 AM, as I complete this
commentary, I see the SPX futures are -11.7 points, so we will be ready to play
the initial contra move.
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