Keeping in the tradition of magical Mondays (now up 17 of the past 19 Mondays), [Jan 18, 2010: Mondays Continue to be Wonderful] the markets have bounced into resistance. As we wrote in the weekly summary old support is new resistance so thus far it's been a classic bounce into S&P 1085. A strong push over this level will have us forced to evacuate more exposure on the short side - to this point we've just given back a bunch of Friday's gains but thankful we took half off the table on thet gap fill at 1071.5, to lock in gains.
If this is not a 2009 situation where a V shaped bounce is about to occur yet again (seems highly doubtful) this retrace to S&P 1085 is in fact an excellent opportunity to initiate new shorts or reinforce old ones for those who missed out last week. Since last week's market acted so normal for the first time in a long time, I am going to assume this plays out by the textbook ... will flee to higher ground if proven wrong.
Don't mess with Texas... or Mondays.