Currently S&P 500 has moved UP from 1040 to 1105 .....a +6.25% move already......it all happened in a flash in 72 hours.....not much time was given to regroup or position aggressively....
Most retail & traders were out of the market fearing Chinese PMI & Jobs report as a downer...BUT surprisingly everything turned out to be roses.......
Technicians are looking @ 1130 area a "top end of this range"...IF you believe this then there is not much juice left in the rally..we are only 25 points away from "mother of all resistance"....BUT wait a minute..there is this 1115 resistance also which is 200 DMA....some are predicting we fail @ that level......SO we MAY be only 10 points away from another resistance......
I do pay attention to technicals & also closely monitor RSI which is currently @ 58.34..recently 60 has been a sell zone repeatedly......
I firmly believe that we are "headed HIGHER"..higher than 1115 & 1130.....this IS based on my interpretation of market "psychology" not a science BUT an ART......
SO..you may ask..what i am looking @......to justify my "exuberance"
First...everyone & their brother-in-law told CNBC audience that market will NOT move UP unless we see a real shift in job creation......guess what....we have seen not only a first better than consensus job creation BUT a revision UP of previous months.....so this not only proves that one month is not a trend but several month IS......
Second....Chinese PMI is telling the whole world that China is now back to growth mode after tapping the brakes for few months to cool its hyper-growth economy.....saying is as goes China so goes world stock market....
Third....after a long time of parking cash in bonds..we saw a decided shift & bond yield move higher....which means that cash is being deployed from bonds to equity...we are talking several hundreds trillions of dollars which could be moved to equity....
Fourth....market is all psychology...whenever there is a shift in sentiment...it feeds on itself....which resulted in higher volume before long weekend.
Based on the above CHANGE which traders should capitalize on......the only resistance i see is 1173.57 in S&P 500 which is 68 points away or +6.15%......@ that point we may be overbought & retrace some of the gains & mark time for another push through 1200.....
SO...it seems that we MAY have more juice left in this run than what technicians would like to commit ....technicians are funny...they see resistance @ every 10 points because they are NOT analyzing the fundamentals of worldwide economy.......
In any market analysis you MUST start with Fundamentals then look @ technicals......fundamentals were telling me strongly that 1040 support will hold
..while SCARED technicians were looking @ 1010 , 980 , 950 & all the way down to 850 in S&P 500..which SCARED away lot of retail....
SO..do yourself a big favour...monitor worldwide economy closely in terms of conceptual issues vs real growth in key economies......this way you COULD have easily concluded that "double dip" exists only in the mind of Roubini/Rosenberg/CNBC......there is real GROWTH everywhere..even in US.....
BUT...always remember to book profit based on potential of each stock......i will continue to book profit and move funds around to improve "immediate relative performance"......there is such a thing of "better returns" on a relative basis.....
You can always monitor strong stocks & will see that some are performing better than others in terms of % moves.....I do this on a daily basis.......
When I am booking profit ...I already know that I am putting that funds in other stocks with better return as a strategy.....
My portfolio is LVS,SOLF,RVBD,VMW.....
I may be adding to my exposure on Tuesday....
Good luck with your OWN analysis of current economic environment & trading strategy...I am a Taurus which forces me to see the forest from the trees..BUT sometimes it CAN be pre-mature.
Stock market is SMARTER than us mortals..so be on guard all the time.
BLOG does NOT give buy or sell.
Saleem
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