Current Long Positions (stop-losses in parentheses): BZ (8.10), MI (6.85), MWV (26.37), CLMT (21.53), MMM (85.55), ALKS (12.17)
Current Short Positions (stop-losses in parentheses): None
BIAS: 35% Long
Economic Reports Due Out (Times are EST): MBA Purchase Applications (7am), Tim Geithner Speaks (8:30am), Import and Export Prices (8:30am), EIA Petroleum Status Report (10:30am), Beige Book (2pm), Treasury Budget (2pm)
My Observations and What to Expect:
- Futures are showing moderate strength heading into the open.
- Asian markets and European markets are both showing a solid amount of strength in trading today.
- 1278 is becoming a strong short-term resistance level on the S&P.
- Today’s strength has us opening up at the 1278 level.
- Ideally, it would be goods if we can gap above that price level because then that resistance level would act as support going forward.
- Like what we saw yesterday, a failed test of recent highs could create a strong intra-day reversal.
- A strong rally today, especially one that takes us into the outer edges of the bollinger bands, would be a good reason to do some profit taking, which would be in the mid-1280’s.
- Continue to watch the market’s relationship with the 10-day moving average, as the support level is becoming increasingly vulnerable over the past three days. Should we end up closing below the 10-day, watch how the market responds to the 20-day moving average, just underneath it.
- The creation of a “lower-low” in this market would be if there is a break below 1251 and would essentially stall the trend out.
- Yesterday showed that dip-buying continues to persist, and that the bears do not have enough selling power, to get past it at this point.
- The more long-term trend-line dating back to 9/1 currently has support at 1234.
- For the bears – Do not let the bulls close above 1278. Doing so would likely create a move even higher.
- For the bulls – Close above 1278, and establish a new higher-high in this market.
Here Are The Actions I Will Be Taking:
