This is the tricky spot we’ve been in a few times as we’ve traveled this accelerated uptrend. Since December 20th we’ve seen this action a few times! Market pulls in: Do you cover hedges and add to longs? Or do you take some risk off and add shorts/hedges?
So far each time you cheated and anticipated break of this trend, it’s been painful or choppy. You probably give back the cash flow that the shorts were suppose to provide you vs. the longs. The Dow bounced off its 10day 12,940 (which was the low of the day), briefly re-tested that area and is bouncing again!
The S&P traded through 1373, went as high as 1378 and now is under yesterday’s high (this might be the start of an outside day). It’s not a bad idea to take some risk off, but don’t abandon the trend until we get a decisive break. The 10day moving average is 1362.
Today was better to sell strength than add, which was helpful for me. If you listen to my radio, you have the luxury of getting all of my commentary real time. I’m on from 9:30am-11:00am, and then in the last hour before the close.
Gold (GLD) got hit hard. It put in a pivot bottom a bit about $167.06, and then broke it on the second wave down. But that was potent and fast. This type of move says caution. If you want to buy vs. the low, do so with that area as a stop.
Banks were good early, lead by JP Morgan (JPM). I did sell most from my entry Friday. I got stopped out of Goldman Sachs (GS) for a loss, that stock has hurt me a few times!
Keep an eye on Apple (AAPL) if it stays intact, they will probably not be able to sell down this market for more than a pause.
*DISCLOSURES: Scott Redler is long SPY, OIH, LVS, WYNN, IBM, INTC, JPM. Short DIA, QQQ.
