The Market Needs To Rally Today
The breakout last week was nice, but we are not seeing follow through.
PRE-OPEN MARKET COMMENTS WEDNESDAY – The market broke through resistance last week and on a move like that it is critical that we see follow though. If we don’t, the risk of a pullback increases every day. The reaction to the PPI yesterday was soft. If buyers were anxious, they would have jumped on that drop and they did not. That tells me that this could be a light volume float higher. Those are risky because gains can be stripped away quickly. If today does not finish firmly above the high form Tuesday, start to reduce some of you long swing exposure.
We have record levels of cash on the sidelines, stock buyback programs and seasonal strength to fuel this move. The list of bearish influences is too long to list. For now, buyers have control.
Swing traders bought SPY on the open Friday ($395.60). Use a $396 as a stop (closing basis). If the SPY does not close above the high from Tuesday today, take gains on half of the position (provided that we are not stopping out).
Day traders should expect dull trading. The volume was light most of the day yesterday. I am seeing some signs of selling and the breakout is getting tired. It feels like the market is in “wait and see” mode again and we are likely to see two-side action.
Support is at the 100-day MA and resistance is the 200-day MA.