Market is in consolidation mode as projected. Compare the current price action with the one which took place 3 years ago.
After a consolidation (the like we are witnessing today), the market continued higher, even though the indicators suggested it was way overbought.
Today was a slow day, as expected. No major news and sideways price action.
In fact some of the stocks I mentioned last week have pulled back a little, and have reached target levels:
ZMH – start accumulating at 59.30-59.70. Stop at 58.20. Target 65.00. 1/5 Risk/Reward.
RINO – has pulled back more than 4%, but has already managed to get into positive territory. Expecting a 50% rise by May.
CHK – buy now at 25.00-25.50. It is a save pick unless it trades below 24.00.
ADY – been burned in this one, but I believe it deserves a second chance. Right now it is stuck between 22 and 21. My strategy would be to buy 1/2 at the current level with the stop below 21. Add to the position when we breakout above 22. Looking for a gap close at 24.
Short term view on the market. Areas to watch closely – 1130 and 1115. Expecting to see some pullback next wee, but not more than 1-2% from Friday close. Then a rise further continues. I would personally like to see some base building before we approach 1150. 
This is a longer term chart for SPX going back to August 2006. Look how the both circled areas look alike. If we use comparison analysis, we should get to 1200 by April Options Expiration. Then some sideways action is possible, as there is a ton of resistance above 1200 area. Though we might get as high as 1230-1250. I am really clueless, what happens next, maybe “sell in May and go away” will be the thing to do this year. We will see.
For the time being I am bullish on the market, unless we sell off below 1105/1085 in the next 2 weeks. If that happens, I will reevaluate my longer term view.
All resistance has been broken, the market is continuing higher and my puts have lost half of their value overnight. In other wirds, business as usual.
As I have stated before, today is a break or make day – it will determine the direction for the coming months. And this direction is pointing higher. Maybe we will get some retracement going into next week (I hope we will) but I am not shorting, but just waiting for the long setups.
Here are some potential plays:
CHK – buy 25-26. target 35 by april opex
CALM – buy at 32-33, target 40-42 by april opex
ZMH – buy at 58-60, target 52-week highs.
AIG – buy 27-28, target 33 next week
RINO – pullback to 22. buy. target 27
Use 3% stop loss.
Compare the following two charts from the past and the future. It will be interesting to see whether History repeats itself or not.
The chart from December 2007.
The recent price action.
Tomorrow the Nonfarm Numbers will be announced. I have no idea, whether we will sell off, or gap up higher (I would liek to see gap down and then gap close and beyond). Though I am betting we will close lower this time next week.
Bailed out of my GS puts for a loss, switched to longs, closed those for a small profit. Bough AAPL puts for a gamble.
1st Resistance at 1.3490. If broken, traget 1.3820. The chart below shows that we are still stuck in a channel.
EUR/USD is looking interesting here. If the area at 1.3450-13550 holds today, I expect to see 1.38 and then 1.40 in a couple of weeks. Right now it looks like a Wyckoff Formation in the making. MACD divergence also confirms this theory.
Markets kept going up slowly during yesterday’s trading session. We are now right below the resistance. should a breakout occur on Tuesday, we are going to 1130.
If there is now breakout today, I would be looking for a pullback to 1105. After that it’s anyone’s guess, what will happen next – a break up to 1130 and possibility of 1150, or a breakdown to 1080-1085.
Here is also a Volume-Weighted Average Price (VWAP) chart below. It suggest that there is a lot of Vacuum in the 15 pt. range right above us. So, should the move up happen, it will be FAST.
Still holding my GS puts, as the stock remains under severe pressure.
Today I got the confirmation, that the market has stalled at current levels. The chances that we are going higher from here are limited. Strong resistance at 1113-1115 area (possible double top in the making).
From here we might trade sideways for awhile in a tight range of 30 pts. or go lower to my target of 1030. Only time will tell, which will happen, but one thing is for sure, longs is not the place to be at te moment.
I have desided to try my luck with GS. The stock has been under a severe pressure lately, there is ton of resistance above 160$, and should the next drop in the stock market occur, it will be one of the biggest losers.
Again, I am playing this with options. Bought some 150 April Puts @ 3.70. Looking for 135 by April Option Expiration. Stop is above 161$.
This trade is tricky, though, as we can fast to 150-148 are then reverse to break 160 resistance, so I will be monitoring this trade closely.
With the SPX being unable to take out overnight high at 1108, and not reaching my target of 1113, I have closed POT Calls for a loss. Don’t have any position at the moment – will wait till the sideways action resolves one way or the other. The market is currently stuck in a 10 pt. range, the breakout above 1108 will resume the uptrend, the breakdown below 1098 will resume downtrend.
My potential long would be POT, potential short is GS.
Have a nice weekend.
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