The SPX Swing Trade Logic
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 made it 4 straight up days on Friday with a +0.2 gain to close at 1109.17, and was +3.1 on the week, which is the best week since November. It hit the 1110 .618RT to the 1150.45 high and the 180 degree angle from 1044.50 at 1110.14, with the intraday high of 1112.42 and closed at 1109.17. The USD hit a new rally high on the Fed bank rate increase, and crude oil closed above $80.
The rally off the 1044.50 low in the key price zone and 1047 200DEMA hit +6.5% with the 1112.42 intraday high, so the anticipated reversal zone has been productive for traders. However, the market was ST-O/B going into Monday as the 4-Day MA’s of the Volume Ratio and Breath Ratio were 73 and 70, and the major indexes were also extended on a consecutive up day basis led by the IWM which was up 8 straight days. The MDY and COMPX were up 6 consecutive days, with the SPX and INDU up 4 days in succession. The SMH and XBD were also up 8 straight days.
The market was flat yesterday as the SPX closed -0.1 to 1108, and it has been churning at the 1110 .618RT zone for the last 3 trading days with closes of 1106.75, 1109.17, and 1108 yesterday. The market was very ST-O/B after Fri with the 4 day EMA of the Volume Ratio (VR) 73, and Breadth Ratio (BR) 70. There is also price and time symmetry, so a short SPX swing trade was put on Friday at SPX 1110.50 with a tight 1.5% stop (1127.15) which gives it a little room above the 1121 .50RT to 1576 from 667, which had provided strong resistance for 6 weeks in 2009 from November to late December.
Have a good trading day!
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