Trader’s Price and Time Symmetry This Week
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.
The SPX was -3.7% last week, and -4.4% the last 3 days, while the “herd” sold
off the tech stocks with the QQQQ -8.2% on the week. All primary sectors were
negative, led by the brokers, with the $XBD -5.3%, while only the $HUI (gold)
and TLTL +0.2% finished the week green. The SPX was -1.4% on Friday, and sold
off -18 points in the last half hour to close at 1453.70. The empty suits on
CNBC once again were hyping the lead up to the Fed rate cut like it was
“midnight madness” and the college basketball season just got underway. Well,
the result is that the SPX is -6.7% from the 10/31 1552.76 high to Friday’s
1448.51 low. The $US Dollar also declined again to new record lows, with crude
oil rising to record highs. All the major indexes except the NDX 100 are trading
below both their 200- and 233-day emas, as are all the primary sectors except
for energy, gold and commodity-related stocks.
The $TRAN and IWM did not confirm the new October cycle highs in the SPX, $INDU
and QQQQ, while the SPX Weighted index did take out the 1555.90 high, but the
S&P Equal Weighted index did not, which highlights the narrow universe of stocks
that carried the SPX higher with the help of the PPT. The $BKX topped out on
2/20/07, while the $XBD made its bull cycle high on 6/1/07. The $TRAN topped out
on 7/18/07, and the IWM on 7/9/07. There has also been a significant divergence
in breadth for the past 5 months, as the SPX advanced on the smaller universe of
stocks, and strength from the energy sector.
The technicals say “equity bear market,” and with the Fed’s reversal to
cutting rates and pumping the money supply to record levels says that a
recession has started, and they are trying to make it a soft landing like 1994.
With the current credit, liquidity and housing debacles, a soft landing is a
stretch, and the cutting of rates and inflating of the money supply will
continue to send the $US Dollar low, so the US Fed is obviously in a lose-lose
scenario short-term, and that will put continued pressure on the bear cycle.
This volatility continues to be a bonus for daytraders who know how to
recognize it and also how to trade my extended volatility strategies. For
example, on Friday the SPX hit 1448.51 in the Morning, which set up the high
probability RST strategy with entry above 1451.95. It ran to 1474.09 before the
3:30 – 4:00 PM knife down to the 1453.70 close. There was significant price
symmetry from 1449-1451, and there was also the intraday Volatility Band level
that provided support to the strategy. You can see the RST setup, and selected
symmetry, by taking a free trial to my Trading Service, and checking the
11/12/07 commentary. This week is a primary time period, that also has Fib
retracement and extension symmetry, to the SPX 1370.60 8/16/07 low, so there is
a high probability of a short-term reversal, especially on continued weakness.
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