2007 Has Major Cycle Symmetry

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.

There was a -6 point decline on the 3:20 PM- 3:25 PM bars Friday, but the SPX still closed at 1418.24 +0.5% on the week, and +13.6% on the year. The $INDU was +16.3, IWM +16.9, QQQQ +6.8 and $COMPX +9.5. The markup by the generals was successful, and a special thank you for the July rally should go to the PPT (Plunge Protection Team) for its efforts in accelerating the SPX into the midterm elections, and to the Federal Reserve for flooding the market with liquidity to help fend off a recession and navigate a "soft landing." The Fed managed to give us a soft landing in 1994, but historically they have been very unsuccessful at it.

This bull cycle is now the longest time period between bull market tops in over 50 years, and that will end in 2007. This new year has a confluence of 10 significant Gann and Fibonacci yearly cycle dates, including 75 years from the 1932 bottom, and 100 years from the 1907 bottom. However, the 20 year cycle from 1987 to 2007 is the most interesting. Gann emphasized the 10-year cycle and its multiples. One way to get an idea of what to expect in a specific year is to check the various cycles and see which one mirrors the current cycle. The result of this exercise is quite interesting, because the 1987 cycle is almost identical to the current 2007 bull cycle. I have marked the symmetry of the six different highs and lows preceding the sharp-angled advance to Point 7 in both 1987 and 2007, and you can see the obvious similarity. The symmetry of 10 different cycles ending in 2007 makes it a high probability that this year will have a significant market move, and if it mirrors 1987, there could be both a top and a 4-year cycle bottom. The $US dollar was a problem for the 1987 market, and current dollar weakness could be a problem for this current bull cycle. However, the PPT is much more active now in manipulating the market, and would most likely intervene much earlier than in 1987, which was essentially the birth of the PPT.

We start 2007 with the $INDU stronger than the SPX and the NDX, which is a negative. The NDX is significantly underperforming the SPX, and that is not a positive, as the strongest market will see the NDX outperforming the SPX. January has a strong seasonal tendency in technology stocks, especially semiconductors, in the first few weeks, so we will know soon enough if the NDX can assume a lead role and prolong the inevitable bull cycle top.

When I looked last night the S&P futures (ES0703) were +8.75 points, and at 7:15 AM, as I finish this commentary, they are +7.25. It looks like 2007 will start with the "gang" making the generals pay up to put any new 2007 money to work. The more things change, the more things stay the same. With the inferior, mostly electronic opening procedure, the "gang" will have a field day in 2007, forcing premium or discount openings. This will make the Trap Door strategies and volatility bands even better strategies than they are now.

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.