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"


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