Brewer's Fans Celebrate MVP
The market was handed another loss yesterday. Volume again was dry. But the bears continued to hammer the indices.
Before I get into additional market commentary, I am a Brewers fan. And I would like to congratulate Ryan Braun who won the MVP award yesterday. The Milwaukee Brewers had a fantastic season even with the tough loss to the Cardinals. And Milwaukee, which is a small market team, is thankful that Ryan Braun signed a long term contract with us instead the evil N.Y. Yankees or another large market system.
Yesterday's decline marked the fifth straight down session. Up until the recent string of losses, the indices hadn't made two consecutive up or down days for a month.
More notable than the loss streak is how easily the bears broke below 1197 support. The decline since last week didn't surprise me too much, but the ease at which it knocked down support zone is bothersome.
I am going to keep my bullish outlook, but the indices need to find support immediately. The SPX should hold 1175. And a rally from that level should get it back to 1197 quickly.
If we were day trading, I'd be short. And I certainly would bias my trade bearish. But this isn't a day trading service. And my preferred holding period is 2-3 weeks.
The sidelines is a though place to be, but losing money is worse than missing a trade. If you are bearish, go short, don't wait for me to do it first.
But I will caution you. The bearish mentality is highly fashionable right now, but step back; look at the chart. Does the entire move from October until this morning really look that bearish to you?
And prior to October SPX had traded in a lateral channel, which started in August. The channel had 1115 as support and 1220 as resistance.
In October SPX bottomed then rallied up to 1220 resistance, promptly broke it, then moved higher. The target for that breakout from the channel was 1325, but SPX could only get to 1293 before it topped and turned.
When a lateral channel is broken, typically previous resistance becomes new support. And for SPX that support zone would be near 1220. Until this week 1220 had provided SPX with support too.
I am willing to give the bulls some slack. Volume hasn't been great and there has been a lot of activity in Europe to digest. December is typically a bullish month for stocks too.
But the bulls need to make a stand very soon. I may open a trade today, if I see a nice opportunity. But if I don't, our office is closed Friday, so enjoy your holiday weekend and I will be back with you next Monday.
