Today looked liked the big day. The bulls breathed a sigh of relief as SPX 1225 drifted into the rear view mirror.. “That was a tough wall to get over,” the bulls sang. Then, while comfortably cruising down the highway, they noticed 1225 appearing larger and larger behind them as they slid closer back to the very same wall they just conquered. What’s going on here? Blow off top? Just a nice rest before the next leg up? Money moving into different asset classes?
The bulls are not yet freaked out, but the high-fives have subsided and a few bears are stepping back into the picture.
It is uncertain where the market will go from here, but I’m assuming a pullback. A shooting star on strong volume that failed to hold the breakout is not bullish. However, after the recent run-up, consolidatino is good – but, not for too long. 1225 needs to be taken out to keep the bears confidence in check.
To keep it simple, the charts tell me to continue the tactic of selective picking – in other words, find individual stocks with volume, momo, and support while reducing overnight exposure. There have been numerous individual wins on short-term time frames and to prove this market is tough for swings, look at silver today. If you would have played SLV as an intraday short today and then possibly long off SMA20 bounce later this week, then you get the idea of selective picking and not taking home all of your trades.
The market needs to make a decision here on the next directional move before I’m a swinger of significant capital. In the meantime, let’s see if 1225 is a springboard or a diving board.