The S&P 500 closed higher for the second day in a row on Wednesday, and the fourth time in the last five sessions. The index seems to be doing its best to clear the 1500 hurdle. The market received mixed reviews during earnings season, but it was able to maintain a slow steady rally.
KEY HURDLES
The biggest opponent of the current upward move may be the debt ceiling debate. Any signs that there is not a possibility of raising the current debt limit could potentially send the market into a sell off. The current debate is at the friendly tennis match level, but watch for it to perhaps escalate in the next few weeks.
THE DATA
Weekly jobless claims continued their recent trend, down 5,000 from the previous week. The four-week average also dipped again, and is currently down more than 15,000 from where it was in early January. Both are small but good signs the job market may be steadily improving.
TRADING
I think the market will want to stay above the 1500 level for the time being. Overnight the March S&P 500 put in a high of 1511. I look at any dips to the 1505 -1507 levels as buying opportunities. The market should run into some resistance at the overnight high, so it is not a bad area to exit long positions. If you are an aggressive trader, you may way to stay in longer. If the market can push through 1511, we could see a run up to 1515.
KEEP IT SHORT-TERM
I’m still a fan of the short term trade in this market. If you are the right side of things, don’t let it turn against you. It is better to have a fish in the boat than talk about the big one that got away.
THERE IS A SUBSTANTIAL RISK OF LOSS IN FUTURES AND OPTIONS TRADING. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. THE USE OF A STOP-LOSS ORDER MAY NOT NECESSARILY LIMIT YOUR LOSS TO THE INTENDED AMOUNT. CURRENT EVENTS, MARKET ANNOUNCEMENTS AND SEASONAL FACTORS ARE TYPICALLY BUILT INTO FUTURES PRICES. A MOVEMENT IN THE CASH MARKET WOULD NOT NECESSARILY MOVE IN TANDEM WITH THE RELATED FUTURES AND OPTIONS CONTRACTS.
