By: Scott Redler
Look for me on Squawk Box this morning at 9:30. I have pulled together some notes for that session and wanted to share them with our T3Live community shortly before the show. Here they are:
OUR THESIS THIS YEAR IS TO MANAGE POSITIONS AND TRADE THE RANGES OF THIS MARKET–THE YEAR OF THE MARKET TIMER.
March 1st was the day that this market confirmed its new uptrend–the S&P at 1,110 was the time to get HEAVY. We then had a 60 handle move. Every index made new move highs. Volume was a big light, but there was healthy volume on individual stock breakouts. The rotation was great and the order was healthy: the Russell 2000, then the Nasdaq, next the S&P and lastly, the Dow.
So, after a three week rally, a pullback makes sense. Last week we saw momentum start to slow. Some key leaders made highs earlier in the week and diverged with the indices later on (AAPL, AMZN, BIDU, RIMM, etc). THIS GAVE US CLUES TO PARE DOWN POSITIONS AND GET A BIT DEFENSIVE!
NOW IT’S TIME TO MEASURE THE STRENGTH OF THE UP MOVE BY THE SIZE OF THE PULL IN! We will watch to see if the prior breakout/resistance level becomes new support. In the S&P that level is 1,150, and I do think they breach it to create some bearishness. I want to see the 20-day moving average hold in around the 1,135 range. In the Nasdaq, the prior breakout was 2,325 and the 20-day stands at 2,314. I will look at the S&P and Nasdaq in order to BUY THE PULL IN.
It seems like earnings and the private sector are trying to push this market higher and Washington is doing everything it can to keep the pressure on. The health care bill has passed and is yet another step toward Big Government and Big Spending. This is not good for the private sector and the market. We need to measure the composure of the market as we deal with all the Washington rhetoric. The market still needs to deal with the BLOATED state pension systems–will we “bail out” the states? There is a growing rift between the public and private sector.
The President SHOULD NOT be calling China a currency manipulator. Our support of Israel needs to stay strong–they seem to be wavering and talking tough with Israel instead by sending them a warning, etc.
The bottom line is–our thesis has been to time this market this year–trade the ranges, manage your positions. This will be a year to take advantage of the ranges in this market and to be a STOCK PICKER year when all is said and down.
