We Had a Rally Today, Dow 25,000 Next Stop Right?!

Today I had to turn off CNBC during trading hours because the message of "Hey you watching, buy stocks now see this rally...you're welcome" finally bothered me too much.  Today we opened at the 100 day moving average on the S&P (about 1260) and rallied to (previous support turned) resistance (of 1278) bounced off and closed below resistance.  It was an inevitable retracement back to resistance and get ready for an impulse move lower next week. 

Z

We Broke Down

     Today we broke down, and nothing can happen later to change that.  Ben Bernanke will come out and maybe the markets will rally off lows but we broke down.  Expect the S&P 500 to fall from 1273 (as I write this) now to 1227 support by mid April, and if that level is broken, 1191.  We currently have resistance at 1278 but that may be a good spot for the markets to close today.  Today was a panic sell-off, they happen and usually the next day follow small retracements.  We have had our rally from last September, and traders are taking off their positions.  It will take a few weeks, but we are selling off.

Z

Tomorrow is an Important Day

     The markets today got hit below their technical support levels with the S&P closing at 1296 and the Dow closing at 11993, below the important 12000 level.  If the market tomorrow shows weakness and is unable to bring the S&P back above 1300, we have our breakdown.  If the market does breakdown we will have an elongated corrective trend that can take a couple months and can take the S&P down to about the 1227 level, before resuming the underlying bull market.

I still believe we are in a global recovery but unlike 2009, we need to be more careful about our timing.  I think the market will be relatively a large consolidation pattern for all of 2011 with a breakout to the upside closer to the end of the year, creating a strong bull market for 2012.  A good strategy for this 2011 market would be to sell when the market feels extended and triggers overbought indicators, and buy when the market has let sell offs take its course and when the market triggers oversold indicators. 

 In the meantime, I am not buying at extended levels.  

Z

No Breakdown Yet

     In the last trading session, the S&P was able to recover and close above the 1300 level, even on a day there was every reason to sell.  This indicates a breakdown at this support level is not going to be easy in this market.  We at this very moment in time are expecting the SPY to be trading in a range between 130 and 134 and until a breakout, we are playing the waiting game.


Z