Will we take out our 2 year high of 11,258 in the Dow Jones Cash? Or are we looking at a triple top? We have not been able to take out that level. I am leaning towards a correction down to the 10630 level and then perhaps the 10,400 level in the cash Dow.
If we settle above 11,300 a rally to the old highs at 11,532 and then the Aug 08 high at 11,782 seem to be slam dunk upside targets.
In the cash S&P, however we have quite a way to go to test our April 2010 2-year high at 1219.80 (close enough to 1220 to just call it 1220, in my book). In any event, The number the trad has been selling, corresponding to the cash Dow levels listed above are the following : Oct 25th 1196.14; Yesterday’s high at 1195.81 and today’s high (so far) at 1195.88….. The S&P cash’s own version of its triple top.
So what is so magical about 1196 cash S&P and 11,258 Cash Dow? I have no idea, but the market is telling us differently. Perhaps these are the levels where the cumulative efforts of all the high frequency trades has gotten us. For better or worse you have to look at these numbers… Cash S&P, I look towards 1135 and 1118as support on a hard break.
This rally has me worried. This rally has me thinking that if the GOP wins the house, it will truly be a buy the rumor sell the fact. Bottom line, these stock indexes are both over due for a correction. Timing for a big correction could not be worse for who ever “wins” the mid terms.
Fed talks tomorrow, as well. If quantitative easing comes to fruition, the market will vote. Bullish, and we extend the rally. Bearish and it will be the straw that broke the proverbial camel’s back. The market is looking for an excuse to move. Tomorrow we will have plenty of excuses.
If you are short, have a buy stop, pure and simple. If you are leaning towards bullishness, consider using a buy stop to initiate a position. Let the market get you long, on a buy stop, if you think we may move higher.
I am prepared to be short in front of this mess. However, I have the emergency release button primed in case my opinion is faulty.
Good Trading
