Its a new year. The bulls are out across the board. My advice is to buy dips, going with the market psychology for January, at least for the first ten trading days.
There is a lot of money on the sidelines poised to jump into the market. I wrote last week that the Cash Dow has 10,800 as a target. As of this writing, that’s only 105 points a way… We could be there after lunch… The broader S&P is being inexorably drawn to 1300. I’d be long looking for that print. We are 30 handles away from that nice, fat, round number target. Its just too tempting for the funds not to run at that level. If the S&P can trade at 1300, you will definitely have Maria Bartiroma and her ilk doing back flips and hand stands for the cheering crowd.
1313 is a level I would want to sell with both hands when we get there. In fact, I’d take off my shoes and socks and sell it with them as well.
In the grains, I’d also be looking for continued strength, heading into the Jan 12th USDA number. We already had WH, (march wheat) run the stops above 800 early this morning. Finally, we cleared out the sell stops there, traded up to 825, and then promplty broke 10 cents after the stops were tripped.
In general, the grains look like they too, will head towards the 08 highs. Those targets are just too tempting setting up there, luring the markets like the sirens for Odysius and his men. Keep in mind what happened to Icarus, however. Higher prices eventually bring out supply, and when the break comes, it will re-define the adjective “frightening”.
Good Trading.
Stay Disciplined.
Use your stops.
That is all.
