The Fed basically kept the same language and the markets closed strong yesterday, the third day of a new fledgling rally. Markets put in double bottom back on Monday, and that pattern has wrested away control of the market from the bears. Last night IBD put market back in a “Current Uptrend”. This time of year always gets tricky with new rally attempts. Sometimes they are misfires. But all in all, the action is encouraging. New fledgling uptrends don’t always ignite major bull runs, but none have started without one.
At this point everyone should just keep an open mind. Get short off the brain, and let the action prove we can hold higher. Get in some quality names but don’t be tier 2-4 unless you truly love it. Macro investors so far only had to stomach a 5% pull back off highs, which is a very healthy number.
The news out of Europe is still frustrating and those problems aren’t going anywhere, so keep your ears open to see how markets respond to the headlines..
Support on the S&P sits at 1378-1382. If we can hold that level in the next few sessions and show commitment, it would be constructive. Usually when you have a New Big picture change in IBD, we just had a move so digestion is good. During digestion, leaders emerge for the next leg higher.
S&P resistance that I would use as a very important pivot is 1390-1392, with the next area at 1404-1408.
Disclosure: Scott Redler is long CF, BAC. Short SPY.