Exposing Ideas to the Envelope of Serendipity

Contact moo at: bluechipbulldog@gmail.com

Friday, March 5, 2010

Where We Are

Stocks gapped up this morning on a "less bad" than expected jobs report, leap-frogging above key resistance and providing a catalyst for a run to 2010 highs. For those paying close attention to the market's voice the past few weeks and not attempting to make trading decisions based on pervasive blogosphere buzz, economic opinion, hope, ego, or personal beliefs, the blueprint was provided and is now playing out nicely. The first loud message we received occurred on 2/5 with a high-volume, intraday reversal at very significant supports on the heels of a 9+ percent correction in the markets. Many market leaders have been making new highs, scads of stocks have been busy base-building, the 50-day moving averages remain well above the 200-day moving averages and are trending up, market breadth is positive and strengthening, and we have an accommodative Fed (to stray only briefly from the technical indications). On top of that, the $RUT has moved into new highs, $TRAN is approaching its 2010 high, the $BTK and $RLX  headed to new highs some time ago, and more recently the market drew us a clear map of a very well-formed inverse head and shoulders pattern. These are not characteristics of a market about to roll over-- they are classic bullish signals of a market setting up for a move higher.

Let's take a look at the $SPX today to see where we are and where we may be headed near-term. If we hold onto today's gains on a closing basis, we will be registering short-term overbought readings that will soon need to be worked off either through sideways consolidation or a pullback of some degree. As things stand now, however, any short-term pullback will most likely present a buying opportunity-- at least for a little while longer. The 1,230ish $SPX target laid out since last March remains very much in sight-- although it is always imperative to continually reassess and not take anything for granted. I will be lightening up on some longs today before all is said and done regardless of what unfolds between now and then.

Ours is not to question why; it's to follow the market's lead and trade what it gives us.

Trade well.

_ Brinkley
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