5 of the last 6 sessions have seen some big moves. as we ping pong in this range between S&P 1130 and 1150. Selling 3 different times the S&P 500 has run to the pivot point we mentioned a week ago Tuesday (1150) has been the right trade thus far. So has been buying at S&P 1135 or below.
Pretty simple thus far but I expect the game to change soon. What breaks first? Support at the 20 day moving average... or resistance at 1150? As we keep saying each time we unload our index long exposure in the upper 1140s we are willing to rebuy when the market can make a new high (i.e. S&P 1152ish) so that explains the game plan to the upside. To the downside it is more complicated. The 20 day moving average has not been broken since 2 sessions in mid December, and like all drops since March 2009 it was a buying opportunity...
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Quite a few areas of importance on the downside
1) S&P 1120 - this is the level from which we broke out of the 6 week range/box
2) S&P 1115 - falling below that would mark a new lower low
3) S&P 1105 (just below) - the first of 2 unresolved gaps in the S&P 500 chart.
But for now the knee jerk reaction is buy buy buy as we are nearer to the low end of the ping pong range. If the cobalt line breaks, than at least it will be somewhat interesting.
As I type, S&P 1133 is here, so I am going to add another layer of index longs here - pressing luck to see if the most obvious thing will work - but somehow disbelieving it will. This will now fully replaces the exposure sold into the Brown for President! rally yesterday morning.