Once again we are attacking the 40% lines.

In the first Member Alert of the morning yesterday I said: “The real breakouts are our 40% lines and they have been impassable so far: Dow 8,412, S&P 945, Nas 1,716, NYSE 6,232 and Russell 513. Those are going to be our key points and it will be the Nas that has to break up and hold it first.” That led us to make a winning play on the Qs but we should have held it longer as they raced even higher into the close. Today we’ll be watching the May highs (if we can get there at all), tosee if we’re just making a double top for the monthat Dow 8,657(8th), Nas 1,773 (7th), S&P 930 (8th), NYSE 6,003 (8th) and Russell 512 (8th). Notice the Nasdaq led us higher and fell off as the others topped out the next day so that’s a pattern we’ll watch out for after getting our Nasdaq leadership yesterday.

It was the Russell’s failure to take out our 514 target that led us to correctly go short on the last run but we were clearly looking overbought at the time. That is not the case so far and it’s very hard to tell on this very low volume move ahead of the holiday. Our main plays yesterday were bearish ones as we initiated put positions on the Dow and MOS, looking to scale into both this morning as we get the pre-market pump we expected. The dollar continues to stay below the 200 dma at 82.60, despite being propped up against the Yen last night but it’s been holding that line in a way that’s worrying the bears and good economic news from the US could snap our rally by strengthening the dollar – it’s a very fine line we’re walking here to keep hope alive.

Keep in mind I had called May 5th “Toppy Tuesday Morning” and I was 3 days earlyat the time, which is why we’re scaling into our puts carefullythis time – allowing the market to give us better entries along the way. I was going to do a Big Chart Review this morning but there’s no point – it’s pretty much the same chart as we had two weeks ago – we’re just revisiting those 40% lines again. Actually, we’re still pretty far below where wewere two weeks ago, needing 3 on the S&P, 32 on…
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