Current Long Positions (stop losses in parentheses): RAH ($60.75), EQY ($16.75), PH ($78.95), GIL ($30.11), HK ($17.63)
Current Short Positions (stop losses in parentheses): DTV ($42.55), EQR ($51.15), VPRT ($42.37), ITT ($48.01), FCN ($36.74), V ($77.61)
Bias: 7% short
Economic Reports Due Out (times are EST): Monster Employment Index (6 a.m.), Jobless Claims (8:30 a.m.), Pending Home Sales Index (10 a.m.), EIA Natural Gas Report (10:30 a.m.)
My Observations and What to Expect
* Futures are up moderately ahead of the bell.
* Asian markets were up, and European markets are showing continued strength.
* The 1,200 level on the S&P 500 was broken decisively yesterday on average volume.
* As stated yesterday, the break of 1,200 was a game-changer for the bulls, and eerily similar to what we saw on Sept. 1. I wouldn’t be at all surprised if we see an extended rally going forward, much like what we saw back in the September/October time frame.
* Continuation is key for the bulls today. Add another few points to yesterday’s gains, and you will likely see a lot more bears cover their short positions. As it stands right now, there are probably a lot bears still hoping that the bulls cannot hold the gains from yesterday. I see this as being very unlikely.
* Dips will be bought — the momentum has completely shifted in the bulls’ favor as the S&P broke out of the descending triangle.
* Support for this market will be at 1,200 — the breakout point for the S&P.
* Resistance will be at the November highs. A break there could see S&P rally as high as the 1260s and potentially into low 1300s eventually (best-case scenario).
* Be very careful of getting overly bearish in this market, as this rally could last for a while.
* The bears’ main goal is to push the market back below 1,200 today, and force the bulls to do battle with that critical price level again.
Actions I Will Be Taking
* Will add two new positions to the portfolio (one long, one short).
* Stop loss changed in Gildan Activewear Inc. (NYSE: GIL). Will do the same with Parker-Hannifin Corporation (NYSE: PH) should the market continue to rally today.
* Stopped out of Titanium Metals Corporation (NYSE: TIE), Sonic Solutions (NASDAQ: SNIC) and Gladstone Capital Corporation (NASDAQ: GLAD) all at my original stop loss.
* Added Petrohawk Energy Corporation (NYSE: HK) (long) and Visa Inc. (NYSE: V) (short) to the portfolio yesterday, near the close.
* May prematurely close out Equity Residential (NYSE: EQR) today, and also replace Ralcorp Holdings, Inc. (NYSE: RAH) with a more promising stock.
* Despite being 7% short, it will take very little for the market to flip my portfolio into a bullish one, since most of my short positions are near their stop losses.
* Follow me in the SharePlanner Chat-Room today for all my live trades, including my day trades.
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