Positive Seasonal Bias This Week

The SPX finished at 1420.86 and above the 2006 1418.28 close as anticipated (3/30 commentary). Daytraders working the RST strategy had the opportunity to take out + 20-25 SPX points on the day, as there was both an RST sell after the 1429.22 high on the 1st hour reversal, and then the RST buy following the 1408.90 low, after the futures-generated Chinese paper sanction decline. Of course that quickly reversed, as always, to 1423.30 before closing at 1420.86. The professional trades the reaction to the news, and the amateur trades the news. Both of the RST's and symmetry are outlined in today's trading service commentary, so it is available for all free-trial subscribers this week. The last 3 trading days of Q1 were weak, but the generals did a good job in bringing the SPX back from the 3/16/07 1364 low, so from that standpoint, it was a positive Q1 markup.

The commodity sector stocks and the utilities were the Q1 leaders, and the financials, due to the ongoing subprime situation, led the downside, with the XLF -3.3% for the quarter. Last week, all sectors closed in the red. The financials and tech stocks must reverse if the SPX has any chance of continuing this bull cycle. The banks and REITs have a historical seasonal tendency to outperform in the first half of April, so we will soon find out if "they" will look past the current negative news. The 4 trading days prior to Good Friday (market closed) have a very positive seasonal bias, so if the generals put some second quarter money to work, including the new IRA contributions, the hedge funds might have something to front-run and the SPX will close above 1420.86 on Thursday. The intraday volatility for the SPX last week was very trader-friendly, as the daily range average was 14.8 points with the lowest day being 11.9 points and the highest 20.3 points on Friday. There were many RST's, Trap Doors and straight Volatility Band opportunities in all the major indexes, ETFs and obviously many of the component big-cap stocks. With the current news cycle in a negative economic and Middle East mood, this volatility will continue, so traders take advantage while you can.

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.