By: Scott Redler
Earlier I said the markets were holding on by a thread, and I guess that was a very strong thread! The S&P held higher with a low of 1190, still above Monday’s low of 1183). Within the wedge, we said that the banks held the key to how the pattern of indecision would resolve itself, and that proved to be the case.
As big bad Obama rolled into town today, the markets sold off into his speech and then bought the rhetoric. It was a “sell the rumor, buy the news” type scenario, and luckily we didn’t get caught trying to get over-aggressive with shorts. The banks bounced and, for now, the uptrend remains intact once again. Even GS participated in the bounce after not breaking through its lower pivots. We can say once again with conviction: “Don’t doubt this rally!”
Also, tech stocks played their part in keeping the thread tight. AAPL triggered through the upper end of the range at 260.25 and is now above 264. AMZN triggered above 150, and BIDU is up 10+ points.
Surprisingly, the casinos are following through also. LVS and WYNN are very strong, while MGM is just okay.
The bottom line is you shouldn’t have gotten aggressive with shorts even if that was your thesis going into the day. We have rarely gotten paid in this rally looking for breakdowns, but have had some success when the uptrend has been breached. Until that happens, still look for buying opportunities in this highly stock and sector specific market. Don’t sit in one place for too long, or you will run yourself in circles. Develop your strategy and wait for markets to confirm them. Don’t get opinionated!
