Can the S&P Hold 1,227?

by Ryan Mallory | December 7, 2010 10:05 am

Current Long Positions (stop losses in parentheses): VMW ($83.70), RRC ($44.59), ATVI ($11.93), APOG ($11.56), BIDU ($105.80)

Current Short Positions (stop losses in parentheses): DTV ($41.09), GOOG ($590.10)

Bias: 18% long

Economic Reports Due Out (times are EST): ICSC-Goldman Store Sales (7:45 a.m.), Redbook (8:55 a.m.), Consumer Credit (3 p.m.)

My Observations and What to Expect

* Futures were up strong.

* Asian markets were mixed, but European markets were up strong to the tune of 1%-2%.

* The S&P 500 opened above the critical 1,227 price level, which has acted as resistance from last month. This is a very strong indication that the market will manage to hold the day’s gains above the 1,227 level.

* For the time being, yesterday looks to be the short-term pullback we were looking for. If the market holds the gains today, and more importantly 1,227, we should see a multi-day rally from here before getting another pullback.

* There is not a lot of resistance in the near-term for the markets. A small bit of resistance at 1,255, but the more significant resistance levels lie around 1,270-1,290. So this market has a lot of room to run in the near term.

* Yesterday’s volume was very light, which is good for a pullback day.

* The current rally has the makings of what we saw back on Sept. 1, when the market rallied for over two months.

* Dip buying will continue to be the name of the game for traders.

* The U.S. dollar failed to hold the trendline and is positioned to move back down to its November lows.

* For the bears: Push the market below 1,227. Failure to do so will ignite a fury of stops.

* For the bulls: Do not break the session lows after the first hour of trading, at any point, and move well beyond the 1,227 level on strong volume.

Actions I Will Be Taking

* Will look to add some morning breakout plays to the portfolio today.

* Expecting to see Google Inc. (NASDAQ: GOOG[1]) get stopped out today, and possibly even DIRECTV (NASDAQ: DTV[2]).

* Tightened the stop losses in DTV and VMware, Inc. (NYSE: VMW[3]).

* Stopped out of The Finish Line, Inc. (NASDAQ: FINL[4]) at $18.60 yesterday for a profit.

* Added Activision Blizzard, Inc. (NASDAQ: ATVI[5]), Apogee Enterprises, Inc. (NASDAQ: APOG[6]) and Baidu.com, Inc. (NASDAQ: BIDU[7]) to the portfolio.

* Follow me in the SharePlanner Chat-Room[8] today for all my live trades, including my day trades.

The SharePlanner Swing-Trading System is a proven trading strategy that has outpaced all the major indices with an 8-year return of over 1,010%. This year alone it is up 29%, with 64% of the stock picks being winners. It’s an easy trading system that requires very little effort after you buy the stock and great for those who can’t watch the market all the time! Find out more by visiting SharePlanner.com[9].

Endnotes:

  1. GOOG: http://studio-5.financialcontent.com/investplace/quote?Symbol=GOOG
  2. DTV: http://studio-5.financialcontent.com/investplace/quote?Symbol=DTV
  3. VMW: http://studio-5.financialcontent.com/investplace/quote?Symbol=VMW
  4. FINL: http://studio-5.financialcontent.com/investplace/quote?Symbol=FINL
  5. ATVI: http://studio-5.financialcontent.com/investplace/quote?Symbol=ATVI
  6. APOG: http://studio-5.financialcontent.com/investplace/quote?Symbol=APOG
  7. BIDU: http://studio-5.financialcontent.com/investplace/quote?Symbol=BIDU
  8. SharePlanner Chat-Room: https://shareplanner.com/education-center/chat-room.html
  9. SharePlanner.com: https://www.shareplanner.com/trading-system/swing-trading-system-long-setups/trading-statistics.html

Source URL: https://investorplace.com/2010/12/can-the-sp-hold-1227/