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Take Profits if S&P 500 Rallies Strong Today

A failure to pass recent highs could lead to intra-day reversal


Economic Reports Due Out (Times are EST): MBA Purchase Applications (7 a.m.), Tim Geithner Speaks (8:30 a.m.), Import and Export Prices (8:30am), EIA Petroleum Status Report (10:30 a.m.), Beige Book (2 p.m.), Treasury Budget (2 p.m.)

My Observations and What to Expect:

  • Futures are showing moderate strength heading into the open.
  • Asian markets and European markets are both showing a solid amount of strength in trading today.
  • 1278 is becoming a strong short-term resistance level on the S&P 500.
  • Today’s strength has us opening up at the 1278 level.
  • Ideally, it would be good if we can gap above that price level because then that resistance level would act as support going forward.
  • Like what we saw yesterday, a failed test of recent highs could create a strong intra-day reversal even for the best stock picks.
  • A strong rally today, especially one that takes us into the outer edges of the Bollinger Bands, would be a good reason to do some profit taking, which would be in the mid-1280s.
  • Continue to watch the market’s relationship with the 10-day moving average, as the support level is becoming increasingly vulnerable over the past three days. Should we end up closing below the 10-day, watch how the market responds to the 20-day moving average, just underneath it.
  • The creation of a “lower-low” in this market would occur if there is a break below 1251 and would essentially stall the trend out.
  • 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 – do not let the bulls close above 1278. Doing so would likely create a move even higher.
  • For the bulls – close above 1278, and establish a new higher-high in this market.

Here Are The Actions I Will Be Taking:

  • Could add 1 to 2 new positions to the portfolio today
  • Raised the stop-loss in Boise (NYSE: BZ).
  • Sold Marshall & Ilsley (NYSE: MI) for a 1% gain after it failed to make any substantial move in the market. Will consider adding again once it breaks out again.
  • Added Alkermes (NASDAQ: ALKS) and 3M (NYSE: MMM) to the portfolio today.
  • Follow me in the SharePlanner Chat-Room today for all my live trades and ideas.

Current Long Positions (stop-losses in parentheses): BZ (8.10), MI (6.85), MWV (26.37), CLMT (21.53), MMM (85.55), ALKS (12.17)

Current Short Positions (stop-losses in parentheses): None

BIAS: 35% Long

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