The S&P pushed through yesterday’s high of 1373 in the morning, went as high as 1378, and then reversed harshly to close back below. If you look at the candle from January 26th- we pushed through previous highs of 1328 to 1333 and closed below it, this led to the longest three day correction this year (about 30 handles). We could be in for a similar type pull-back after all of the Dow 13,000 hysteria.
SPY held the 10day moving average at $136.48, and so did the Dow. But let's be honest, today felt a bit different. Gold (GLD) got cracked badly after Fed Chairman Bernanke's testimony in front of Congress. The first potent move led to another, as I discussed in my 11:00 am note.
The market can go down much faster than it goes up, something we have been reminded of especially over the last six months. I think that is much of the reason people are scared to commit to this rally. But if you have a gameplan in place and stay armed with technical levels, you can get out ahead of the wave if it comes.
I did clean up longs and will have a little less risk on after today. I will be doing a bit more short-term day trading in the next few sessions, rather than trying to hold swing longs. Hedges are prudent, and a bit less risk makes sense for now as momentum bulls might be a bit spoiled. As a reference, the 10day is 1361, 20day is 1352, and 50day is 1310.
*DISCLOSURES: Scott Redler is long SPY, OIH, LVS, WYNN, JPM. Short DIA, QQQ, AMZN. Long AMZN puts.
