As I research the markets day after day, I find some interesting technical signals and signs recurring.  One that I mentioned recently was in relation to the previous 52 week high on the SPDR S&P 500 ETF (NYSE:SPY).  The previous 52 week high was $115.14, until it was taken out over the last few days.  My previous thesis and call was that the institutions, seeing the markets hit the 52 week high of $115.14, would take the market through that level to approximately $116.00.  The reason for this theory is due to the weak handed amateur shorts in the market. When any major stock or market hits a key major resistance level, amateurs and pros will sell or short it.  That creates the key resistance at that level and the reason for the markets to stall.  The key is to understand the institutional money and realize they will push the market through this level to scare the amateur shorts out of the market, grabbing their money.  When the $115.14 level was hit, traders shorted the market.  Sure enough, the market was driven higher today, jumping to $116.00. Once the weak hands are out, the market can then fall and institutions bank even more money.

This is a sad but true fact of the markets. We must all understand the game.  I said to my premium subscribers in last nights Research Center video that I would look for the markets to go to $116.00.  Sure enough, that is the high range of the day.  Since then, the markets have faded beautifully. Learn the game, profit from the game.

The markets today are hovering flat, after a gap higher. The gap higher came on the back of 8:30am ET Retail Sales numbers that were slightly better than expected. As soon as the market opened, it dumped. The selling continued on some poor consumer sentiment numbers.  The University of Michigan index came in less than expected.  The markets sold from a high of the day on the SPY at $115.97, all the way to a low of $115.14.  Notice the number of the low of the day?  Yes, the previous 52 week high. Poetic in many ways.  Since that low, the markets have gone sideways to higher, floating on extremely light Friday volume.

Stocks In Motion

Potash Corp. Saskatchewan (NYSE:POT) gapped higher today on the back of comments from the company.  They said their earnings would be higher for the first quarter.  Potash Corp. stated earnings would be in the range of $1.30-$1.50, well above the initial guidance of $0.70-$1.00 per share.  The stock soared almost 7% on the day.

The financial sector is strong today and one of the main reasons the markets are holding flat on the day and not selling.  The key today seems to be Goldman Sachs Group, Inc. (NYSE:GS).  This stock is single handedly keeping the markets up. Goldman Sachs is higher by 1.40% today.

Another key to the markets holding flat is clearly Apple Inc. (NASDAQ:AAPL).  The technology sector is not very strong today but Apple is making up for it.  The stock continues to hold most of its gains today up $1.36 to $226.86.  Optimism over the release of the IPAD is still luring buyers into the stock. Both Goldman Sachs and Apple Computer are near term overbought and due for pullbacks.  However, due to the light volume this may be hard to come by.

The last key to the market holding up today instead of selling hard is the dollar.  The dollar is  getting hammered. As the dollar drops, bids come in the market.  To understand this one must understand money flow and commodities in relation to the dollar.  When money flows out of the dollar it looks for someplace else to go.  Someplace where returns will be decent.  The answer to that is stocks.  In addition, when the dollar drops, commodities must move higher to compensate.  As commodities jump, so do commodity stocks which are now a huge part of the S&P 500.  Therefore, this takes the markets up a little as well.

Gareth Soloway
Chief Market Strategist