Markets staged a powerful rally to end the quarter, spirited by news out of the European summit. You only had about 5-10 minutes to switch gears on Friday. If you came in flat, markets paused and gave you a few moments to “jump in” as SPX did go up another .07% after the open. A stock like AAPL opened up $7 and closed up $15. So there were a number of opportunities in the early morning to jump into leading stocks if you entered Friday flat-footed. If you came in short, you had to bite the bullet quickly and book a loss, or decide to roll them up based on a thesis that could work out in the long term, but will require risk, time, and commitment!
Technically, the market was hanging on by a thread late last week – the SPX 1306-1309 floor was holding, the 61.8% Fibonacci retracement continued to stay intact, but it was hard for intermediate trend traders to maintain heavy longs, as the market felt a bit broken and IBD had just put us back in a “market correction.” On the other hand, if you were sitting on heavy shorts, you were playing with fire as the summit was under way and news like we saw Friday could have been announced at any time.
This is why I talk time frame frequently. I think market participants MUST have a long term equity plan for the Future. It could be a 401k/529 B plan. It could be macro stock holdings where you can pick long term stock winners. These are all very different time frames versus trading for cash flow. Tactical trends could be daily or weekly, or last a full quarter like we saw in the first quarter of this year!
This morning futures are basically flat. Short term we are brushing up against the $1363 peak where we paused pre-Fed back on June 19. The longer we stay here without pulling in too much, the more jumpy trapped shorts will get. If we trade through and close above 1363, the next level is 1373-1375. Beyond that, we aim for the major target of the inverted head and shoulders pattern at 1385-1395. In the short term, momentum bulls would like to see the markets hold above 1350-1354!
It seems like the macro levels in OIL held, as $75-$77 was the major support zone that held late last week. It powered higher quickly on Friday, which should relieve some pressure for a bit. $88-$92 is next very big resistance.
Gold (GLD) moved Friday as well. $148.30-$148.50, the major level isolated many times, is still intact. It’s still controlled by the intermediate downtrend that now stands around $157.50-$159.50
It’s a bit ironic that if you read all the headlines this weekend, Germany and Merkel have been painted as the big losers! Spain, Italy, France, and Greece are gloating and doing some victory laps in their local media outlets. I’ve also many heard many people here in the US gloat as they live in their homes mortgage free or with loan modifications as banks can’t foreclose for various reasons. Eventually the padlock does come! I think living with a mantra of low debt and within your means will pay off in the long run. If nothing else, you always want to go through life with your head high and in control of your own destiny.
Disclosure: Scott Redler is flat