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Rally Possible if S&P 500 Tests Highs

Failure to best recent tops could lead to reversal


Current Long Positions (stop-losses in parentheses): BZ (8.01), MI (6.85), MWV (26.37), CLMT (21.53)

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.), Wholesale Trade (10 a.m.)

My Observations and What to Expect:

  • Futures are showing moderate strength heading into the open.
  • Asian markets had a slight positive bias and European markets are showing strength in excess of 1%.
  • S&P 500 poised to challenge recent highs at 1278.
  • Current short-term trend-line has flattened some over the past two days due to intra-day dips. Not a bad thing, just the steepness of the trend-line itself cannot be held, and had to be moderated some.
  • Be careful today of a failed test of recent highs that could create a strong intra-day reversal for even the best stock picks.
  • Should we break through 1278, mid-1280’s are very achievable.
  • Continue to watch the market’s relationship with the 10-day moving average, as the support level is becoming increasingly vulnerable over the past two days. Should we end up closing below the 10-day, watch how the market responds to the 20-day moving average, just underneath it, currently at 1257.
  • The creation of a “lower-low” in this market would be if there is a break below 1251 and would essentially stall the trend out.
  • No edge seen when it comes to volume. Been nearly identical each day this year, with the exception of yesterday which saw a small dip.
  • Yesterday showed that dip-buying continues to persist, and that the bears do not have enough selling power, to get past it at this point.
  • The more long-term trend-line dating back to Sept. 1 currently has support at 1234.
  • For the bears — The 10 and 20 day moving averages are within reach, and this may be one of the better opportunities to drive this market down and cause some technical damage on the charts.
  • For the bulls — break recent resistance at 1278 today.

Here Are The Actions I Will Be Taking:

  • Could add two to three new positions to the portfolio.
  • Raised the stop-loss in Boise (NYSE: BZ), Marshall & Ilsley (NYSE: MI), Mead Westvaco Corp. (NYSE: MWV), and Calumet Specialty Products Partners (NASDAQ: CLMT).
  • MI is on my sell list today if it is unable to make any substantial move.
  • Day-traded ProShares Ultra S&P 500 (NYSE: SSO) off of recent intraday-support yesterday for a .75% gain.
  • Follow me in the SharePlanner Chat-Room today for all my live trades and ideas.

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