It looks like, we’ve stuck in another range, as it was in November – mid December. Only this time it’s only 20 pts. wide. In fact the volatility has dropped so much in the past several months, that most traders, who were used to turbulent 2008-2009, are finding it difficult right now.
Still, there is plenty of opportunities out there, especially among individual stocks. I will post a list of most interesting ones later this week.
As for now, here is my view on the market. It looks like the market is straggling to make new highs, every 20-30 point move is met with the 20 point sell off. Though, we haven’t sold off yet. This makes me thinking, that we won’t, at least in the near term. Someone wants it to hold, and every pullback of 20-30 points is bought back. Also, all major resistance lines have been broken, opening more room to the upside. This are all indicators that we are going higher longer term.
The general rule is, that after a strong up day, similar to the one we saw yesterday, there is usually a continuation rally the following day. So, Right now, 1140-1142 offers a nice support level. Buying here with the 5 pt. stop is a good R/R trade. My target would be at ~1210. If a breakdown below 1128 occurs, I would have to change my view on the future direction.
As always, we need to remain cautios, as at this point relentless buying is just not worth. As the indexes don’t offer much of reward right now, it may be usefull to turn your attention to individual stocks.
