by Ryan Mallory | January 4, 2011 9:50 am
Current Long Positions (stop-losses in parentheses): NVDA ($15.49), BZ ($7.83), GS ($166.30), BCSI ($29.37)
Current Short Positions (stop-losses in parentheses): None
BIAS: 28% Long
Economic Reports Due Out (Times are EST): ICSC-Goldman Store Sales (7:45 a.m.), Redbook (8:55 a.m.), Factory Orders (10 a.m.), FOMC Minutes (2 p.m.)
*Futures are showing some slight follow through on yesterday’s price action.
* Asian and European markets, once again, saw a lot of strength.
* S&P did a great job, despite some afternoon weakness, of keeping most of its gains, and more importantly breaking out and staying above recent market consolidation.
* Not much in the way of near-term resistance, but dating back to 2008, the market could see some resistance between 1271 and 1276.
* One thing that I would be very careful of is the similarities between this rally, and the rally from 11/4 and the selling that occurred thereafter. If we are heading in that direction, you need to be careful about getting too heavily long in your portfolio at this point.
* Yesterday’s rally was right off of the 10-day moving average.
* Volume finally reappeared as the S&P saw an above average amount.
* The rallies of Sept. 1, and Dec. 1, saw decent follow through in price action the following day.
* Recent consolidation has allowed for the S&P upward trend-line to flatten out some which was healthy for the sustainability of the trend itself (steeper trend-lines can often lead to much quicker and sudden corrections).
* I am growing more concerned by the recent trading relationships between dollar, gold and equities. A divergence worth keeping an eye on.
* Any break below recent consolidation (1250 or less on the S&P 500) would represent a lower-low in this market.
* For the bears – Not much in terms of near-term price resistance to lean on, so the bears need to begin halting further upward movement, and start a pullback that will create a future price barrier for equities.
* For the bulls – hold the gains from yesterday, and provide some follow through over the next one to two sessions, that will lead the bears to further cover their positions.
* I am a bit cautious about getting to heavily long. Another rally today and into tomorrow, will be a good reason to begin aggressively taking profits off the table.
* Boise Inc. (NYSE: BZ[1]) rallied well yesterday, and will live to fight another day. I do have my eye on Blue Coat Systems (NASDAQ: BCSI[2]), should it fail to recapture its breakout level today.
* Goldman Sachs (NYSE: GS[3]) and NVIDIA Corp. (NASDAQ: NVDA[4]) responded well to the market strength yesterday and when weakness kicked in at the end, it maintained its gains on the day.
* Closed out positions in Peabody Energy Corp. (NYSE: BTU[5]), Apollo Group (NASDAQ: APOL[6]) Owens Illinois (NYSE: OI[7]), and Eastman Chemical Co. (NYSE: EMN[8]), mainly due to the lack of action (OI & EMN) and inability to maintain the bulk of the day’s gains (BTU and APOL).
* NVDA continues to show a lot of strength, but I am becoming a little bit nervous over whether it may at this point be overextended.
* Added GS at $171.62 and BCSI at $30.65 yesterday.
* Follow me in the SharePlanner Chat-Room[9] today for all my live trades and ideas.
This article is from SharePlanner.com[10].
Source URL: https://investorplace.com/2011/01/monday-solid-tuesday-follow-through/
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