The Market is a Game
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 SPX declined -4.6% from the 1039.47 rally high on 8/28 to 991.97 on 9/2. The market was extended on a momentum/rate of advance basis, and there were obvious negative momentum divergences as we enter the Sept/OCT “death zone”, so the probabilities for a reversal during this period are obviously high.
I also said in the previous commentary that almost everyone is anticipating the reversal, and the market has a nasty habit of not going along with the “crowd” very often, so it may take another quick turn up to squeeze the “crowd” first, before it can correct to at least the 956-944 key price zone.
This is exactly what happened on Thursday in front of the jobs report when the SPX had another one of the “mystery moves” in the last 30 minutes to close at 1003.24. Of course, this followed lame duck Biden’s incredulous announcement that the stimulus package has created or saved (new socialist buzz word) 1,000,00 jobs. Joe, I hear there is a cheap Brooklyn Bridge for sale.
On Friday, the unemployment rate hit 9.7%, but it is really 16.7% (U6) if you include those people working part time, only because they can’t find a full time job (www.shadowstats.com) Also, the 216,000 announced jobs loss for August was hyped as better than expected by the empty suits on CNBC, when in fact it included a Birth/Death Rate adjustment of 118,000 jobs estimated by the BLS to have been created by newly formed businesses, which is just an estimate and can’t be proved. However, this kind of information is always left out at CNBC and the other media outlets. All of these numbers are available at the Bureau of Labor Statistics (BLS), so Google it and have some fun.
However, price is reality, and the market was muscled higher after the jobs report on Friday, in front of the Holiday weekend, on the lightest NYSE volume of the week at 1.15 bill shs. If the PPT (Plunge Protection Team) was doing the muscling following Biden’s statement, they had an easy time because of the thin liquidity in front of the Holiday, as many professionals got a head start on the weekend.
The SPX went out Friday at 1016.40, or +1.3%, and the SPX futures are now +10 points as I finish this up at 8:15 AM. Did someone say there is an Obama speech today??? If this sounds negative it is meant too, and there are $trillions of reasons.
This is most likely the quick turn up to squeeze the crowd, but I still think the odds (80-20) strongly favor a correction to the 956-944 key price zone during this “death zone” period before the SPX can sustain a move to the 1121 .50RT zone (1576-667).
Have a good trading day!
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