Volume will decline and liquidity reduced this week
Kevin Haggerty is
the former head of trading for Fidelity Capital Markets. His column is
intended for more advanced traders. Kevin has trained thousands of traders
over the past decade. If you would like to be trained by him,
ext. 1.
The market enters the
Christmas week with some negative momentum divergences, but the
Generals and hedge funds are holding price and you should expect them to attempt
pushing it higher so as to maximize their 2005 performance. It isn’t about
earnings right here, folks. Volume will fall this week, reducing
liquidity, which is a sitting duck for the program “gang” to move the SPX higher
with buy programs. This forces other buyers to pay higher prices for artificial
reasons and the SPX is manipulated to higher levels.
The option expiration put a halt to Friday’s
strong pre-9:30 a.m. futures up-move and the SPX closed down -0.3% to 1267.32 on
expanded NYSE volume of 2.03 billion shares. The expiration effect was evident,
with the volume ration neutral at 49 and breadth just -98. Net net, the
internals were a push despite the expansion in NYSE volume due to the
expiration.
There are three time dates on this Friday (12/23)
and a couple on 12/27, 12/28 and 12/30, followed by a couple in the first half
of January ’06. Look for initial topping action by the FSELX
(Fidelity Select Electronics) in January ’06 as an early market alert, with with
the Semis topping with it in January or else by March of ’06.
Keep your powder dry unless you get a defined
setup. Buying weakness is still the better way of playing the intraday side.
Have a good trading day,
Kevin Haggerty
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