1,228 is Target for SP500 Cash

  • Posted on: April 27, 2010

We got through the 62% retracement target I have been talking about for a few weeks now in the Dow at 11,238. Dow cash posted a new 13 month high at 11,258. It only bested the target by 30 points before settling 53 points off its high, at 11,205. Once again, lack of follow through, which is a problem which has plagued this market for the entire creeping rally. New highs are always immediately failures, followed by back filling. Then over a lengthy period of sideways to higher trade, it creeps higher. And pros have been selling every new high for the past 13 months.

Today’s high in the S&P500 cash at 1,119.80 is just 9 handles away from that Fibonacci Retracement.
We will get there. Probably this week. It too will be a sale for the first two prints there. Undoubtedly there will be a lot of action there. Volatility could spike up quite a bit, because EVERYONE in the trading world is aware of the existence of this target. Period. Even those who later will deny they paid any attention to it, will be watching it.
In a market as dull and listless with so few moves to take advantage of, traders are all looking for a reason to buy or sell, looking for some sort of follow through.
Yet, all we get is a chop-fest creeping rally. There is no real volatility to speak of in the general market indices. In individual stocks? Absolutely, but as far as trading the indices, we continue to have a lack of interest, a lack of volume, and a lack of trading opportunities.

In any event, I think we’ll get that print by this Friday. After that, its any ones guess, but barring a good 10 or 15 percent pullback from these levels, my feeling is, the S&P 500 will continue to creep higher with the Dow Cash.

As I have been writing for 3 months, now, the Dow is going to have to go print 11,465.
Then things could really get interesting.

I am starting to get bearish, however, after being cautiously bullish for quite a while. The one thing this market had going for it was the wall of worry.
As more and more market pros go on record getting bullish, it makes me want to lighten up on longs and be very quick to get short if this market turns suddenly.

Good Trading