Annual return of 118.79% - See How Click here now!
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 anticipated reversal accelerated Friday with the $SPX -1.3% as it hit a 1373.72 intraday low, which is -4.6% from its 1440.24 rally high. It closed at 1375.93. The expected pressure on the $SPX was expected to come from the OIH, XLE, and XLB, all of which were extended to their 1 year +2.0 STDV bands, in addition to the $TRAN which was out to the +3.0 STDV band. Volatility in these sectors continues to revert to the mean as the OIH has reversed -6.8%, XLE -6.2%, XLB -6.9%, and the $TRAN -7.5% from their extended high band levels. The $SPX reversal was initiated as the major financials made 123 lower top short term trend reversals, and was then accelerated by the extended OIH, XLE, XLB, and $TRAN reversals.
The $SPX finished -3.4% on the week, while the $XBD finished the week -7.9%, $BKX -5.7%, XLB -4.9%, $TRAN -4.3%, OIH -3.3%, and the XLE -3.1%. NYSE volume was only 1.1 billion shares Friday, with the Volume Ratio 16, and breadth -1397.
The internals are now short term oversold with the 4 Day MA's of the VR 29, and breadth -823, while the 5RSI is 23.71 I expect the $SPX to close higher next week than the 1375.93 close this week. In addition to the ST-O/S condition, there are only 4 trading days left in the month, and the Generals will mark up some of their key holdings in the leading sectors if they can, absent any overt "derivative meltdown" news.
There was a sharp morning decline Friday in the major indexes as the $SPX hit 1374.11 on the 11:30 AM bar (5 minute chart) before making a contra move to 1379.70. There was Volatility Band symmetry as the -1.5 VB was 1375.95 This intial contra move failed and the $SPX traded down to the 1373.26 intraday low on the 12:55 PM bar, before reversing to 1378.86, where it then reversed down to a triple bottom low of 1374.26, before reversing to 1381.04 and closing at 1375.93. It was not an easy day trading the $SPX as the contra moves were not significant relative to price action.
The $SPX 1440.24 rally high (5/19) reversed right between the 1417 .50RT and .618RT to 1576 from 1257, and there was also time symmetry, so trading service members were not surprised at the anticipated reversal.
You can take a free trial to the trading service by calling (888) 484-8200 (Ext. 1 sales) or by going to www.KevinHaggerty.com.
The next commentary will be Thursday 5/29/08.
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.
About TradingMarkets | Contact | Advertise | Careers | Link to Us | Site Map | Help | Terms & Conditions | Privacy Policy | Return Policy | Testimonials | Feedback
