Trader's Primary Focus

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. Mr. Haggerty is a co-founder of Tradingmarkets.com and is the founder of www.KevinHaggerty.com.

The $SPX pulled back to 1384.11 in 5 days from the key price zone high at 1422.72, and the trend since the 3/17/08 1257 low remains up as the $SPX closed yesterday at 1403.58 (+1.1%) after bouncing off the March trend line and minor support that you see on today's chart. The 1383.07 low of the high week held, so that is the key downside level this week. There was also Fibonacci time symmetry yesterday as it was calendar day 55 from the 3/17/08 1257 low.

The NYSE volume remains light at 1.05 billion shares yesterday on a +1.1% $SPX gain, and the lack of buying or selling pressure has been the norm since the 1257 low. Liquidity in the market has declined as the Institutions are less active, and most of the price action is accelerated by the pre-market $SPX futures which in turn accelerates all of the discount and premium openings we are seeing. The decline in liquidity makes it very easy for large "players" to muscle the market intraday, and the regular buy/sell programs have a magnified effect on price all of which is positive for daytraders but is heartburn for swing traders.

The only two major S&P sectors with a positive return on the year are Energy and Materials, and of course they remain the most productive for day traders, in addition to the universe of just 50-60 mega cap stocks that the "Generals" are over-weighting. I publish a focus list with the highest probability trading situations each day in the trading service which you can see with a free trial.

There are multiple economic reports this week, and most all of the Federal Reserve Presidents are scheduled to put their "two cents" in over the next week or so, and this will result in some good intraday volatility for daytraders to take advantage of, especially in the first hour. The brokerage firms technical analysts will hype the $SPX if it trades through the 1406.55 200DEMA, and 12 month EMA at 1410.68, but nothing good happens unless the 1417 .50RT to 1576 from 1257 gets taken out and held, which means "they" have a shot to run it to the 1454 .618RT zone. Trading extended volatility by buying the weakness and selling the strength in the major indexes and ETFs continues to be the best avenue for daytraders.

The next commentary is on 5/16/2008.

Have a good trading day!

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.