I had a feeling the markets would find a bottom as the bulls are still in charge. BUT, I am not a buyer. I hope we do rally so we can have a positive April-May period, but I don't want us to rally every single day as we did after the correction during the Japan episode. We still have a lot of time until options expire next Friday and I could use some time decay. Remember, as of right now, the SPX is only about 30 points from its high - that could be taken out in a half day of trading. So I could use some "indecision", but as I have always said, the risk remains to the upside.
The "BUT, I am not a buyer" is an important statement and I will get to that in just a moment, but that is basically the theme for today, which is PATIENCE!
Let's quickly talk fundamentals:
**retail sales - I expect them to be supportive of the markes as people are spending
**tail end of earnings - it has been a very good earnings period
**CPI - I don't think this can have an effect on the markets even if it does come in high (I hope it does come in high and does have an effect on the markets - here's to wishful thinking!)
**Bernanke - ever the dove (dove means accomodative and hawkish means inflationary). Think of a dove as flying up (equity prices go up due to low interest rates) and think of a hawk as swooping down (equity prices go down as the fed raises interest rates to fight inflation).
To the charts we go and first up is the SPY with local resistance around Friday's high's, which is also the "Line of Death" in the Fibonacci Retracement around 76.4:
So the question is, do we buy the dip or sell the rally. Well, so far buying the dip has been the correct trade and the selling the rally trade remains to be seen. I think it will work on a number of stocks, especially ones that corrected very deeply. The SPY did not correct deeply and is very close to its highs, even before the rally began, so I am not ruling new highs out.
To prove to you the "sell the rally" game, let's see if WFM (also one of our socially responsible investments of the day) can get back above the line of death - not so sure and as a holder, I am looking to generate income.
Let's move to the "patience" part of the talk. Remember, these commodities have run and run and run. So ask yourself: "Is a deal really a deal?" If you ask yourself that, you understand:
**the big picture
**patience
First up, CNX:
Not liking it? I think you would have liked USO at 61.8 and a 14% discount.
Moving to a real laggard and RIMM and I do have a Blackberry and I can attest that product wise, it is brutal. See the text box on the chart below, but 1.2% isn't bad in 39 days and I actually may want to own RIMM in the mid 30's.
Moving to a true retailer, EBAY:
Retailers have been very strong and the trend is up and we do get retail sales later this week. I expect them to be good, but is this enough of a buying opportunity at thest high levels? It definitely is in reach of taking out its old highs.
Finally, on the equity side we arrive at our second socially responsible investment of the day with Ford (F). Again, read the text box as this is a classic uptrend:
Again, is this buying opportunity as good as it was a few weeks ago or have fundamentals changed (they haven't), but have technicals?
Let's cruise into the forex realm - a very, very active day where you needed your Fibonacci Retracements for your DOUBLE FALL LINE TRADES:
And since volatility picked up, our average daily ranges have picked up and we got a nice BUFFAL BOUNCE out of the EUR/USD today:
Click here for the link to Wednesday's Free Webinar.
Happy Trading and Be Environmentally Cool
Coach Brian
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