Traders Focus Into Month End

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 closed yesterday at 1524.17 (-.06%) after an intraday high of 1529.24, and can possible take out the 1553 3/24/00 bull cycle top by this weekend. The SPX futures are +5.5 points at 7:05 AM Eastern time, so if that holds, it will only take a few buy programs to take out the key level today, at least on an intraday basis. Markets usually don't reverse until significant highs or lows are taken out. The daily range for the SPX this week so far is only 7.8 points, between 1529.87-1522.05, and this narrow range will most likely be resolved to the upside into the weekend, with the Memorial Day up bias. The last 3 years have all traded higher into this holiday weekend.

Energy remains the dominant sector for daytraders, and the OIH took out the previous 169.75 high last Friday, and made another new high of 173.14 Monday before pulling back yesterday to close at 168.45. The key angle symmetry from the 40.22 bear market low (9/27/01) is 171.40, 174.69 and 178. The OIH is a +4.3 bagger off that 40.22 low (173.14/40.22), while the SPX is a +2.1 bagger off the 768.63 low. The energy sector is obviously very extended, and there is no traders edge unless there is some more pullback, but this might be delayed because next week is the last 3 days of the month, and the generals might decide to decorate their largest energy portfolio holdings.

NYSE volume was 1.51 billion shares yesterday, and the internals were neutral with the volume ratio 52 and breadth +241. The TLT was -0.6% yesterday, and is at the neckline of a big head and shoulder pattern that started in 9/06. It closed at 86.74, with the neckline low at 86.60. As you can see on the chart, both of these lows have symmetry with the 610 ema (Fibonacci). The high of this pattern is 91.15 on 12/1/06. The last significant low is 82.56, made on 5/12/06. Rising rates may help the $US dollar, but not the housing market, which is much weaker in most parts of the country than the bogus government statistics indicate, and most of all the consumer. An inflationary recession is alive and well, but so is the equity market teflon bubble that continues to defy reality and time, so much so that the PPT still refuses to release the minutes of their frequent Open Market Committee meetings despite being requested by some in Congress, in addition to others under the Freedom of Information Act. That in itself indicates they have become much more active in the markets, other than the 1987 crash and the 9/11/01 disaster when the NYSE was also closed 4 days. The $US dollar looks to have anticipated the rise in rates, as it rallied from 81.25 (5/1/07) to a 82.41 close yesterday, while the TLT declined from 89 on 5/8/07 to 86.74 (see chart). This is a key level, as the TLT is short-term oversold, at major support and also retracement symmetry at 85.74-86.

Daytraders should continue to focus on ATL (Above The Line) stocks (20>50>200), especially those that have pulled back to the rising 20 or 50-day ema, in addition to contracted volatility patterns at or near the highs.

Have a good trading day,
Kevin Haggerty

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.