Traders Ride Major Fund Holdings Mark Up

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 closed the Q4 expiration week at 1427.10, +1.2%.  Most of the gains last week occurred in the first 30 minutes on Thursday, as the SPX traded up from the 1413.21 Wednesday close to 1424.64 on the 10:05 AM bar.  On Wednesday and Friday, almost all of the gain occurred on the gap-up opening bars, but the Thursday breakout to new cycle highs was a trade-through entry, so daytraders had opportunity.  There was obviously a lot of program action last week.  NYSE volume expanded to 2.1 billion shares on expiration Friday, and although all of the major indexes closed on the plus-side (SPX +0.1%, $INDU +0.2%, QQQQ +0.3%, $COMPX +0.1%), the volume ratio was only 48 and breadth -210.  The 4 MA's of the volume ratio and breadth remained neutral at 48 and just +117 despite the new cycle highs by the SPX and $INDU.  There has also been a negative money-flow divergence in the SPX and $INDU since month-end October. 

The leadership last week was the BKX +2.5%, OIH 2% and XLE 1.5%, while the bio-techs finished red, with the IBB -1.7% and $HUI -1.6%.  Gold declined last week as the $US dollar rallied off its lows to close at 83.68, +0.4% on Friday, while the $HUI was -1.4%.  The OIH (-0.4%) and XLE (-0.9%) were both down on Friday despite crude oil ($WTIC) closing at 63.33 +1.9%.  The January crude oil future closed on Friday at 63.43, which is equal to the high close from the past 52 trading days, in a trading range between 63.75-58.  The energy stocks have led the crude future, as the OIH declined from 169.75 to 118.19 on 10/04/06.  The crude oil future bottomed at 58 on 11/20/06.  The OIH had already rallied to a 137.66 close that same day, and hit 150.98 on Thursday before closing the week at 149.60.  This resistance zone has different symmetry from 150-153 including the .618 retracement to 169.75 cycle high from 118.19, which is 150.05.  The .50 retracement zone (143.97) was price-resistance for 24 trading days before breakout to current levels.  For daytraders, the higher risk in the price zone is continuation, so favor the intraday VB setups on weakness until this price zone is resolved.

The SPX is +14.3% and there are only 9 trading days left in 2006, so the generals will not let much of this gain slip away, and it only takes a few buy programs to push it higher.  The top 10-20 major holdings of the generals will continue to have magic advances like "they" took up GE and HON the past 2 days, and that is where the daytrading focus will remain into year end.

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.