This weekend we noted the wedge pattern that had developed in the SPX. Wedge patterns are patterns of indecision, thus we would wait for resolution before sinking our teeth in. However, every indicator foreshadowed a break to the upside. A reverse head and shoulders pattern combined with the wedge and leading stocks had begun to perk up and followed through yesterday as the wedge indeed broke sharply to the upside. This morning we are opening up a little higher and this bounce could have some more juice. Continue to keep an eye on tech names like CREE and VMW, as well as staples AAPL, BIDU and AMZN. The banks are continuing to lag, and if this bounce is going to really be strong they will need to join the party. We have come fairly far over the last few trading days, so be somewhat cautious with longs and shorts at these levels. Simply continue to be very stock selective.
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