Exposing Ideas to the Envelope of Serendipity

Contact moo at: bluechipbulldog@gmail.com

Wednesday, August 5, 2009

The Bulls Take a Breather

In early trading at least, the bulls have eased up a bit, with the market seeing the first signs of a pullback in a long while. Whether it will turn out to be yet another "pause that refreshes" or the start of a more measurable correction, remains to be seen. At this point, based on the proliferation of bullish bases percolating throughout many market sectors along with technical projections, it would appear that any near-term pullback should present yet another buying opportunity. Then again, the widespread buoyancy has been unparalleled, and those initiating or adding to short positions should be wary of the possibility for yet another bear trap. The first area of support that I'm monitoring is the 984 area on the $SPX, followed by the more important 958 - 960 level that coincides with the neckline of the inverse head and shoulders pattern.

If the anticipated-- or at least hoped for-- pullback does get underway, it will likely be a good time to start putting together a shopping list for some swing long positions. One of the best acting sectors in recent weeks has, surprisingly enough, been the housing group. If the short-term extended conditions can be worked off, there should be some appealing entry opportunities. A couple of trading ideas are shown below, but there are many in the group with similar setups.

It should go without saying that the nature of any imminent correction will be critical to monitor. If selling becomes aggressive, leading stocks start breaking down beyond the expected ranges of normal consolidation, or key technical support levels are violated, it will be time to reassess and make adjustments to the near-term outlook.

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