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.
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.
1st Resistance at 1.3490. If broken, traget 1.3820. The chart below shows that we are still stuck in a channel.
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.
Exited Google Options for a nice profit yesterday, made back what I have lost in KAZ and then some. Will be looking to buy some Feb@540 options at the pullback (if there is one) at the open today. The catalyst for the pullback might be the gap below and a resistance are at 1105 in SPX
Here is the whole list of long setups for the coming week:
Less risky.
WOOF, ABVT, SHLD, ATI, ADY, GOOG
More Risky
ACAD, AMD, APL, BKM, C, BPCG, CBI, CCOI, DPTR, HOG, INSP, JADE, CNA, JAH, HME, MSO
All the setups are almost the same, the idea is to buy a pullback in the rising stock.
Looking for this reversal to be stalled somewhere between 1101 and 1105. Then expecting a pullback, where I would be lookiing for entering longs. The ideal area would be ~1095. Target for the next leg up would be 1118-1120.
Ultimate target would be 1130, which is a exactly 25 pts. from the 1105 resistance area.
Some things to watch out:
The current price action is inline with my expectations. The projection about Financials turned out to be spot on, with the general market rallying “only” 1,60%, while the XLF index has gained more than 2,00%. So, we can say that the banks are pushing the market higher.
I have no idea of how long this party will be going, so I am placing my bets accordingly. Looking to short SPX futures near the 1135 area or on a breakdown below 1130 (see the chart below). Looking to add on the way down, otherwise will close for a loss.
SPX is continuing forming its rising wedge. To say fair enough, the chances of the sudden rise and the sudden fall are equal. For now I’ll stick with my view of a sudden collapse and will be looking to place short bets at a 1125 – 1135 area (see the chart below). There is also a possible Wyckoff Formation in the making.
GOLD also indicates, that the current rise might be done. See the resisting trend lines above? So, if you are into gold trading, I would suggest to short at 1122-1130.
PS. GOLD and SPX are trading at exactly the same level right now.
The rally yesterday was pretty good, now I would be looking for a pullback. The chart below suggests that a BARR (Bump and Run Reversal) chart pattern might be in play. In the nutshell, this pattern indicates accelerating trends, every last one faster than a previous one. This continues as long as the move up gets almost parabolic. The main trick here is to use money management and account sizing wisely, as you most definitely won’t catch the top.
This pattern usually works on the daily pretty well, so it would be interesting to see how it plays out on the 30-min. chart.
Numbers 1, 2, 3 indicate trend acceleration. Target 1080-1082. This is a pretty good area to enter longs, for my 1120 target.
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