The Next Position Trading Edge

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 initial bear market rally from the 1/23 1270 low in 8 days to 1396 (+9.9%) has been stalled between those levels for the past 8 days, after having declined to the 1316.75 low on 2/7, versus the 1318 .618 RT to 1270. This is a neutral price zone, with the SPX 1348.86 close yesterday, which can only be resolved with a Wave 5 down below 1270, or a 1-2-3 Higher Bottom trend continuation above 1396 to the 1420-1450 key resistance zone, which includes the declining 233-day ema (1444) and 200-day ema (1446), in addition to the downward trendline from the 1576 10/11/07 bull market top. The .50 retracement to 1576 to 1270 is 1423, so it is a significant price zone. The rally off the 2/7 1316.75 low has been led mostly by the energy sector on the crude oil advance for this period.

The USO bounced off the bottom of its 4-month trading range, and is +10.6% in 5 days, off the 68.57 low. Each time Crude hit the low end of the range, Chavez rattles the sword, and crude advances. He must be making a ton on long crude oil calls before he sounds off each time. The XLE is +10.8% for the same period, and the OIH +12.6%. Trading service members capitalized on the USO range trade, and there have been consistent daytrader opportunities in the energy individual stocks and ETFs.

Daytraders have also capitalized on the short side for the past 3 days, as the SPX traded up to that 1364.-1371 initial resistance zone, accelerated by the hyped reactions to news, which of course faded quickly, especially after the gap up openings on Tuesday and Wednesday. Key strategies like the Trap Door, RST and 1-2-3 all came into play, and there was also Volatility Band symmetry at the extended levels, so it has been a good run for daytraders. The strategies are all outlined in the trading modules, and can also be seen with a 1-week free trial to the Trading Service.

The market is not short-term oversold or overbought, is not extended to any long-term Standard Deviation levels, and is not at a key price zone, so there is no edge for position traders right here, until we see at least 1 of those conditions. I still think the 1270 low will get taken out in this bear cycle, even if the SPX rallies to the 1420-1450 zone first, and if it does, it will be a high probability short opportunity with a low common denominator entry.

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