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.
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.
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.
Today I have got the confirmation, I was talking about – the pullback is over for the time being, and the next stop for SPX is 1113 – 1120.
it also looks like EUR/USD has also reached the bottom for awhile. The pullbacks are keeping being bough back, MACD shows divergence.
As for the stocks, we’ve got an ugly opening today, but managed to make it all back. Also, a lot of stocks have closed the day with big gains, erasing the losses for the previous days. One of those stocks is POT.
This is a nice buy here a 110-111, with the stop below 105 and a next weeks target at 122. Short term target is ~116. You may also want trade through ATM Call options, as they offer a better R/R for a trade.
I personally have bough March Calls@110 at 5.05. Stop below today’s low. Looking for 122 next week, though it all depends on tomorrow’s price action. If SPX is not able to break above 1113 I am out of my position.
The weeks has started with a pullback, which is a positive sign in my opinion, as this will help to fuel further rise in the days to come. Currently SPX is sitting at 1090-1095 area, which is a pretty solid support. If the level holds I am looking for 1110-1115 as first target and 1130 as the second target.
In case we don’t hold the support at 1090, this might be a sign of more downside to come near term. Targets on the downside are 1030-1010.
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