Trading the Symmetry Zones

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 11/21/12

The Obama post-election decline after the 11/6 1428.39 close was -6.0% in 8 days to a 1343.05 low on Friday 11/16, and it has reversed + 3.6% so far to a 1391.25 high as of Wed 11/21, before the Thanksgiving holiday.

The initial support zone was 1425-1395 and the SPX held 1395 for four days before breaking that level and trading down to some significant symmetry which proved to be a bonanza for day traders that are familiar with how profitable it can be when you trade the key zones.

On 11/9 the SPX made a +13 point advance from entry to a 1391.39 intraday high after hitting the 1376.41 200DEMA zone. On 11/12, the index gained +6 points from the same 200DEMA zone before reversing, and on 11/13 had a significant discount opening bar low of 1371.39 and ran +17.5 points to 1388.91.

The .50RT to the 6/4/1 1266.74 low from 1474.51 is 1370.63, and 1370.80 is a Square of 9 angle from 1474.51, which is the bull cycle high from the 3/6/09 667 bear market low. In the previous commentary I said that the 1377-1370 zone had a significant cluster of symmetry, in addition to being O/S, so I expected the market to bounce from this zone.

However, the SPX only held the zone for 3 days, and then broke down to the next significant cluster of symmetry. When the Fib .50RT to 1266.74 got broken the odds were strong that it would decline to the next Fib zone, which was the 1346.11 .618RT to 1266.74. It did just that making a 1348.05 low on 11/15, and then the reversal low at 1343.05 on Friday 11/16. The SPX was as much O/S at that zone as it was in June 2012. Also, the QQQ, NYA, IWM were also at their 377DEMA`s.

The SPX made an intraday double bottom on 11/15 at the 1348 level and ran +9 points from entry to 1358.68 followed by another excellent trading day from the .618 1346.11 level, and I have included that 5 min chart. The initial trade was the RST after the 1344.98 low, with entry above 1347.64, but the trade was scratched for minimal profit after the reversal from 1351.98.

However, the second trade on the reversal of the 1346.11 .618RT level ran +15.2 points from the entry above 1346.17, to the 1361.40 high. All told there were about +68 SPX points from entry levels to the highs starting on 11/9, all from the symmetry zones. You are not going to catch all of those kinds of gains as everyone manages trades differently, especially those traders that always bail out after very small gains. The recapture rate for most good traders after those setups in key zones was about +68%, so thank you very much Obama, and have a nice day.

On Monday the SPX was +2.0%, and hit the +2.0 VB on the 10:00AM bar, then flat lined all day to close at 1386.89 It closed flat on Tuesday. However, there was a 200DEMA setup Tues after the 1377.04 low, in addition to the 1.414 Fib Extension symmetry, and the index ran to a 1387.81 close. I have also included that chart.

All of my trading strategies and also how to anticipate and trade the symmetry is covered in detail in my Trading Service.

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