Current Long Positions (stop-losses in parentheses): BZ (7.95), GNK (14.37), MI (6.77), DF (8.58), LSI (5.91), MWV (26.08), 

Current Short Positions (stop-losses in parentheses): None

BIAS: 21% Long

Economic Reports Due Out (Times are EST): None

My Observations and What to Expect:

  • Futures are showing moderate strength heading into the open.
  • Asian and European markets are both showing weakness in trading today. 
  • S&P setting up to open at or below the 10-day moving average, which is something that hasn’t occurred at all during the duration of this rally going back to 12/1.
  • Should we trade below 10-day moving average, the next area of support to watch is 20-day moving average. 
  • A break below 1251 would represent a “lower-low” in the market, and would greatly enhance the bearish cause going forward. 
  • Volume was fairly steady and slightly above average last week. 
  • Dip buying always is a strong possibility, even on days where the market is setting up for a strong push downwards. Be very careful when initiating new short positions in the afternoon, as that tends to be the best time for dip-buying to start ramping up. 
  • Hanging-Man candle pattern on the S&P Friday could be an early indication that bullish enthusiasm may be waning in the short-term, and could bring forth some additional selling. 
  • 1276-8 is representative of the higher-high in this rally, and is providing short-term resistance. 
  • The more long-term trend-line dating back to 9/1 currently has support at 1234.
  • For the bears – At the very least close the day below the 10-day moving average – ideally  below Friday’s lows. 
  • For the bulls – Needs to see some dip buying come in and support this market – close above the 10-day MA, but by no means lose the 20-day MA. 

Here Are The Actions I Will Be Taking:

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