July Durables Flip Double Dip Expectations the Middle Finger
The market blasted higher yesterday. Volume soared as the indices climbed over 3% in a persistent rise. The accumulation was great as technology led the charge higher. Additionally, the indices were able to put in a big day without the help of a falling dollar which was a positive sign of market strength.
Yesterday I wrote about how the bulls needed a big day and also how I thought the bulls were going to get it. The SPX was near a sturdy support zone, and a bottoming pattern was in place. All the bulls needed to do was pump the market higher and then SPX would be on its way to 1197.
I also mentioned yesterday that I intended to get long. And believe me, that was true. In fact, I have a half-written buy alert that could prove it.
However while I was preparing to send out the alert an earthquake hit D.C. (I know that sounds like 'the dog ate my homework' line) and since it's protocol to evacuate a building after an earthquake, that 's what I was forced to do.
So there I was, with two hours left to trade in the day, stuck in the middle of the street with no cell reception amid hundreds of thousands of other people, and unable to finish the buy-alert.
While I was not around to add a new position to the TradeMaster portfolio, that shouldn't have kept you guys out of the market yesterday afternoon. I take precautions so that if I'm absent, the internet goes down, or there's an earthquake, TradeMaster subscribers can still gain access to trade setups. At the bottom of every morning email I update SPX support and resistance zones, which you can use to trade e-mini or SPY.
Additionally, roughly once a month you will be sent a special report with five trade setups on a particular sector that I think could to very well over the next month.
Finally, every weekend I prepare a 20 minute video that discusses market action, trade education and stock setups. I think the video is the most valuable tool that you have as a TradeMaster subscriber, and I encourage everyone to watch it. Stocks from the weekend video had a great day yesterday and I am hoping some of you were a part of ANN (up 7%), AAPL (up 4%), GLBC (up 6%), LULU (up 11%), MAKO (up 6%), MG (up 8%), YOKU (up 6%).
Now that the market made its big move, let's plan to see consolidation above 1131 before a big run higher towards 1197. Additionally yesterday's low on SPX of 1122 needs to be held. I think that price is the most important support area to watch in the short term because if SPX moves below it, the index is likely going to 1050. Conversely, if SPX can stay above yesterday's low there is a great chance of 1200 again, probably 1235.
The bulls will not get much help from Asia today, which has lost most of the Tuesday gain. Last night Japan's credit rating was downgraded, but a $100 billion plan was announced following the downgrade. The Japanese government will release exchange reserves to Japan's state run bank to be used to fund and aide exporters. Japan has tried to directly stem the increase of the yen against other currencies over the past year with no success. This $100 billion plan signals monetary officials have no clue how to stop the rising yen - it's a mini exporter bail-out.
The activity in Europe is healthier than Asia. The indices were Europe trade flat after yesterday's rally. And that price activity is wholesome consolidation needed before a push higher. Although, those indices can quickly turn negative if the U.S. durable goods news does not receive a favorable response. Durable goods for July increased 4%, which is way ahead of 1.9% expected and the 1.3% drop in June. That's a big number. And it definitely is a big middle finger sent right at the double dip crowd - the market should like it.
