Stocks for the Rest of Us
Posts tagged S&P 500
Starting to Get a Little Extended
Jul 23rd
The major indices are starting to get a little extended here. A prudent trader would be taking more gains as the markets continue higher. One thing of note is the trend in declining volume which usually indicates a lack of sponsorship and belief in the rally. If today’s volume ends up being rather high it could indicate a “blow off” top in which the buyers exhaust themselves and the sellers usually take over from that point.
S&P 500 Support: 820
Dec 2nd
If you’re thinking about getting long take a lookat the bounce today around 820 on the S&P 500. That’s probably the best bet for a point of reference. Consider placing a stop around 810 to protect yourself if the market starts to break down.
Update 12/3: Support has held 820 again today. If we can’t rally here then I suspect we’re going to go through it.
Wall Street on Vacation Makes For Choppy Trading
Aug 25th
The trading action today was again choppy as most of the big wall street traders are most likely on vacation. Volume was low and the moves were jittery. While the major indices are not overbought they are definitely far from being oversold. Therefore you need to take a defensive posture. I’m still net long but I sold off some energy related stocks such as PBR and SJT last Thursday on the big spike. I continue to hold my XLE long position with a stop around 72.50. Seeing as how we’re not yet oversold I would not initiate any new positions here as the risk at this point is too high.
S&P 500 climbs the wall of worry
Aug 14th
The broad market today continues to climb the wall of worry as inflation numbers come in a little hot. This is often the case in most bear market rallies and the action tends to feed on itself. This market rotation in and out of commodities and financials is frustrating unless you’re daytrading your posistions so the best strategy here is to simply reduce your exposure until a clear trend begins to emerge. Currently I do not see that happening quite yet but eventually some new leadership will push the market higher.
Bear market bounce is still in play
Aug 13th
The bear market rally is still in play. There’s nothing wrong with a little profit taking and this bounce coincides nicely with a bounce in the energy and commodities complex. I’m a little concerned with resistance here at the 50 day moving average but so far the indices are holding up and the lack of follow through on the down days coupled with low volume selling bodes well for more upside. As long as the selling is contained I think we can work our way higher. Having said that, the market still sucks, keep those stops tight and protect capital. MACD and MACD Historgram have yet to show signs of a bearish divergence but I feel like that may be coming soon and that will be the tell to get out.
S&P 500
Market holds its ground…kinda
Aug 12th
The market appears to be just barely holding its ground after the bad news from JP Morgan. Two weeks ago this news probably would have sent the major averages down over 2%. Don’t forget, JP Morgan is perceived as one of the best run banks and the fact that they’re writing down another 1.5 billion out of no where is nothing to sneeze at. Assuming we don’t sell off too much more today this kind of action suggests that the market is looking for a reason to go higher and I continue to hold my long positions. We’re still in an established short term uptrend here with the lower end of the channel around 1280 or so and the 50 day moving average acting as a bit of resistance here. I’d like to see S&P 500 move up a bit higher and pull back to the 50 day moving average as support for another upside move. Having said all that, don’t forget to keep tight stops on all positions as this market has proven over and over again that it simply doesn’t care what anyone thinks.
The rally continues
Aug 11th
The rally continues today but some profit taking is starting to kick in on the major indices. Ideally we’d like to see a small pullback giving the bulls a chance to reload. As long as the profit taking is contained I think we’ll be ok. The market really seems to be trading off oil right now which has been hit with heavy profit taking after it’s run to almost $150. My concern is that the drop in oil has been so hard and so fast that it could be due for a bounce soon which will most likely drive the indices lower. One thing to keep in mind though is that long term oil prices do not correlate with long term returns in the S&P 500. Oil has been going up since this bull run started in 2002 but it wasn’t until lately that traders have been fixated on it. I suspect if oil gets below $100 it will disappear from the headlines all together. So if you have a longer time frame then you can forget about all this oil madness because there is no meaninful long term correlation between oil and stocks. After all, sustained higher commodity prices are a sign of a strong global economy.