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$SPY Read for the Day, March 30, 2011

“We continue your regularly scheduled BULL MARKET..we apologize for the interruption”

My oh my, We are walking into a HUGE gap-up today. The ES hit as high as 1324.50 for a cool +8. <–Ka-Pow!

Coming into the week I wanted to see some digestion for the run to 1338 by Fryday, so far so good. Monday and Tuesday we saw the needed digestion, and a lot of constructive activity under the surface. Now when we see 1338 I will re asses the situation. At this point I just cant see us blowing through it like it was not there. It is the single biggest area of resistance on the SPX. But that is still about 10 points or so overhead. One day at a time. When we do break it, strap in, we will rocket higher. Depending on how we get there.

The NYMO is a very important tool in my box, and it is at +25.34 coming into today, we are no where near overbought. The way we have recovered 70+ points off the 1249 lows has been very constructive, we have paused when we needed to and lifted when we needed to.

This recent run has been a blast to trade, after finally correcting 7%. My own trading has been a fun ride, just ripping points out of all kinds of stocks. But do not forget where we are. We are just under that brick wall of 1338. This is a “toppy” area. I love trading after dips/corrections. This one is not done by any means. Just keep heavy cash. I haven’t deployed more than 50% of my account in several month’s. Call it what ya want. I call it disciplined trading. You don’t have to try and be a rock-star every day or month for that matter.

Copper is a MAJOR market tell. I watch it like a hawk. We have lost the all important 436 level on a closing basis. Copper usually leads the overall market by 2-3 days. It is recovering though, It has tagged 438 in the overnight session. I think copper just took a break. It is ready to run again.

The SPY has hit as high as 132.86 this morning, a full one point higher than the close yesterday, and by breaking 132.75 we are pushing into the “Vacuum”, take a look at my SPY Weekly chart. Since the cup was put in back in the summer, the measured move was 135-140. We saw a high of 134.11. Plenty of room to go people.

To dial it in for the day I use my SPY 60 minute chart. First support under us is the gap fill at 131.86 and then my MAJOR support of 131.42. That should hold today. Worst case scenario is the 50% fib at 130.53. Cant see that even getting close today. Upside target is the gap which starts at 133.04 and fills at 133.95. Then we have 52 week highs at 134.11.

Important to note that no matter where we are or what the market is doing, you have to be careful to not chase on gap up’s like this and ALWAYS sell some into it. You don’t see a hungry rat in a cheese shop do you?
Baa!

Swings L: $ANF 56.35 $ATPG 9.90/11.17 $FSLR 155.98 $JBHT 43.58 $OXY 101.14 $SSO 51.90 $X 55.15 $ISRG May 350 calls 10.60 $GS 160 weekly calls @ 1.17

Trade Setups for March 9, 2011

SPX Read For The Week- February 22, 2011 It’s Shake N’ Bake Time!

As I am sitting here preparing for the upcoming week, the futures are down huge. The ES is down -17. Dow futures are down -102. Just as I expected and talked about on Fryday, that more than likely a 100 point gap-down was coming. Just felt that being long up here was just plain and simple a sign of bad discipline. Tensions in the middle east right now have this market spooked at the moment. We were able to shake off the Egypt news to my amazement. This will be a big test now. Gold, Silver, and Oil are off to the races tonight. Oil at one point was up +10 WOW. It closed at 88.80 last week, and tagged 98.48 tonight, be careful not to chase any oil names early.
I am 90% in cash right now in the trading accounts, and feel great about. The way I have for the most part played the greatest bull market in history since March 2009, has been to not really short the tops, but rather sit in a large cash position and wait. Wait for what ya might be asking. Well it's a pretty simple answer, "SUPPORT". As my charts clearly show 1338 is a tough nut, yes we cracked it ever so slightly. In my opinion we will lose 1338 as a monthly close.
The SPX is in a rising wedge on all time frames. Only a matter of time before it cracks. Now for short term support areas, 1325 and 1310, there is a gap to fill at 1310.87. Losing 1310 will have us falling out of the wedge. Just a simple 5% pull-back/correction would bring us to my long term support area of 1274, which I would consider to be a gift. I believe any dip/pullback will not be in a straight line. This market is just too strong for that. I am prepared for the volatility to crank it up a bit. Which I welcome with open arms.
One of my major tools that I use is COPPER. Its an excellent way to read the market, It usually makes it move before the SPX. August being a case in point. The low was 320.00. When the SPX in August bottomed at 1039 Copper was already ripping some 20+ points. Then subsequently ripped to new all time highs of 465 where it printed a bearish engulfing candle . For the past 2-3 weeks, it has been looking more and more like a topping pattern to me. 436 is key here. We lose it? Well I believe more pain in store for the SPX.
The dollar also found support on Fryday @ 77.52. It has already tagged 78.25 here on Sunday evening. The weekly trend-line under it has been tested, and has held up so far.
There are so many divergences in the market right now, The NYMO being one of them. This recent move in the SPX from 1274-1344 has not felt right, un-healthy would be a great way of putting it. I for one always "Mind the McClellan". I find it to be utterly ridiculous that the SPX moved from 1173 back in November to 1344, and the highest reading the NYMO could register has been +34. Not normal to say the least. Lets do our best to stay on the right side of the market this week. No reason to be too aggressive one way or another. Expect some "Shake ~N~ Bake"


All charts can be found by clicking charts: Charts

Trade setup in GS for February 16, 2011

I'm long here from 168.25, looking to add over 168.72 maybe. I like the chart here. Looks due for a big day. Can see 172 trend-line touch.

SPX Read going forward - February 13, 2011

We got our dip alrighty. Two Fryday's ago, A one day dip was about all the market could muster. The rebound from the Egypt sell-off news has been impressive. Up until we broke 1310 and held it for a week, I was still thinking topping pattern. That has pretty much been violated. The 10 day EMA has been consistent support. Buying any dip no matter how slight off this area has been rewarding. Since we hit 1274 I became very cautious on the longs as well as the shorts using small size, looking for the elusive dip, which never really came. Resistance has been like butter in this push though 1235 due in part to the "Vacuum". As you can see on my charts of the weekly and more importantly my monthly, the vacuum which was turned on at 1121, still has way more to go. Long term resistance is 1338 and if we break it, we should get "sucked" higher FAST. The monthly chart continues to point to a multi-year bull run, but keep time frame in mind. My next overhead resistance numbers are 1370,1404, then 1432. First "real" support under us is at 1274, and then 1235. The market can always go way higher and also way lower than one would normally expect. Just like this run from 1039 this past august, as well as the one from 666 in 2009. Both the daily and the weekly charts have embedded stochastics, which one should never short. Even the volume has been good as of late. I will continue with caution and the same smaller size etc for now. It is also options expiration week as well. Going into last Thursday I felt as though we would see the low through the following week, still feel the same. That low was 1311. We just might see 1370 by Fryday. Good luck out there this week.