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Can the S&P Hold 1,227?

If the market holds above this level, we should see a multi-day rally


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) get stopped out today, and possibly even DIRECTV (NASDAQ: DTV).

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

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

* Added Activision Blizzard, Inc. (NASDAQ: ATVI), Apogee Enterprises, Inc. (NASDAQ: APOG) and, Inc. (NASDAQ: BIDU) to the portfolio.

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

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