It is not the end of the world as we know it. That should be comforting. Two weeks ago no one was sure. The news flow was incredibly poor. The equities markets were in free fall.
What a difference a few days make. We have rallied to a wonderful point of resistance 800 on the S&P. The government announced they would print, print, print. Don't ya feel great? I was a major seller of my longs into the post-Fed announcement rally.
The market rallies, treasuries rally, gold rallies, the dollar falls.... What gives?
We are still in an uptrend, but we are quickly running into SIGNIFICANT resistance. I exited my long trades, and put a number of shorts on as we moved into resistance @ 800. It was a purely technical short. Although we remain in the uptrending channel. a Break below 773 may signal a near-term reversal.
Pullback??? that is my thought here. On pullbacks I am looking at SPX 748, 731, and 715 respectively. 748 to 731 makes the most sense to me. I will be a buyer into these levels.
If this scenario pans out I should be doing well. My plan it to go through my wish list and a married put buyer of a number of individual stocks. FCX and PBR among others. I plan on using a dynamic hedging strategy to capture gains and cap potential losses. I believe there will be much opportunity.
As I look at a longer term picture, I see an interesting path to SPX 944-1000. This scenario would take us back to the 200 day MA and primary downtrend line. If we have just completed a Wave 5 move, the mostly likely retracement is to the previous W4 (SPX 1000). That would jive with a number of interesting theories out there. A move up to Memorial day, then a major plunge and resumption of the bear market and new lows mid-2009 to 2010. This is a move in which I believe has credence.
