The market opened sharply lower Monday morning but trended higher all day to prevent any technical damage on the charts. The Dow finished only 7 points, or 0.05% lower for the day. The resilience of the bulls in 2012 has been impressive, and today was no exception. Bears pushed the market early through the $130.60-130.80 floor but there was no downside momentum as we hit a low of $130.06 and bounced pretty hard.
Apple (AAPL) was very strong today as investors continue to digest its blockbuster earnings report. One analyst projected that the company could get a 57 million iPhone sales boost from China, based on average adoption rates on carriers. The Chinese are knows for having a high-demand for AAPL products, particularly the iPhone. Last year fake Apple Stores popped up across the country to answer that growing demand.
All in all, today's action can be considered very constructive for the market. However, I believe we find ourselves in a trick area right here. While the market trended higher most of the day, I found it hard to find stocks that I wanted to add to long besides Apple (AAPL). I'm not ready to put more money to work long but also not prepared to take off my hedge. In the mid to long-term, I do believe the market goes higher, though.
With more time, we will see if the work we are doing over 1300 is going to be all the corrective action we get. Many believe that we could hit 1275 before the next big leg higher, and I could see that playing out. You don't always have to be all in on one side of the market. If you have some uncertainty, it's fine to have more limited exposure at certain stages, and with the high-stakes games being played in Europe right now, that is the route I am choosing to take for now.
*DISCLOSURES: Scott Redler is long SPY, OIH, GOOG, AAPL, LULU, WMT, REE, MCP, QCOM calls, DNDN calls, VXX. Short DIA.
