European Debt Fears... What European Debt Fears?
The market popped again yesterday. The gains were impressive, as was the total volume. Once again, technology stocks led the charge higher as the U.S. indices posted their third day of gains. And our technology plays, like Apple (NASDAQ: AAPL) continued to do very well.
At one point the indices were up over 2%, but a 1% pull back just before the close prevented the bulls from finishing near session highs.
Although the close was weak, the session was strong. After a sluggish start in the morning (where the bulls found resistance at 1175) the indices gathered steam at noon. And once the break out occurred the indices never looked back.
The SPX broke 1175 resistance around midday, and only a few hours later it had managed to hit 1197 resistance. Unfortunately, 1197 proved heavy resistance, and SPX quickly sank to 1187.
Now that the bulls rallied past 1175, they need to hold it, and make it become support again. I would expect some consolidation today and into tomorrow since the market has rallied from 1135 to 1199 in three days. But by Friday's close, the bulls need to have stayed above 1175.
The bulls look strong, and it's likely they hold 1175. As long as 1175 becomes support on the SPX, the index should rally higher and up to 1250.
As mentioned in the past, 1250 is going to be difficult resistance. And it still seems unlikely that the bulls will be able to break through it. The market needs a huge catalyst in order for buyers to build a rally that takes SPX over 1250. And the only remaining major catalyst is the Fed meeting later this month.
The European bailout yesterday juiced the indices past a few resistance zones, but that will not be enough to even dent 1250. The next opportunity for a major market moving news item would be earnings season, but that's in another few weeks.
For those looking to add stocks today consider our portfolio positions Actuate (NASDAQ:BIRT) and Datalink (NASDAQ:DTLK) with stop losses at $5.50 and $9.69.
Despite the potential for a major rally following Bennie and the Feds two day September meeting, I intend on keeping our strategy in place. And once again, that strategy is to accumulate, or buy stocks, below 1155; and sell, or sell-short, above 1200.
P.S. I'm excited for this weekend. I've been bugging my co-worker Andy to reveal to me some of his secrets about options trading. Andy has helped me craft a few options trades for you and the other folks in my Trademaster service, but this upcoming Tuesday he'll be revealing a lot more about how he does what he does.
If you'd like to join me, click here to sign up for this event. If you're interested, please do not wait.I know Andy's event will soon be at capacity.
