We are at a major crossroads and price action in the next few days will be critical. There are daily RSI and MACD bearish divergences on just about every single index out there and VIX/VXN are at historical lows. Call resistance above is quite clear. This is not the time to jump on the giddy bullish bandwagon, however if you are long from the opening January lows, you can afford some leeway and should just simply move up your stops. For the DOW, that would be 10830 and for the COMP 2245 (watch those 20 day moving averages!). A look at the attached chart shows that the Nasdaq is very close to the June 2001 highs at 2328. A close above will usher in a whole new paradigm, a failure here will set up another round of consolidation. The media will focus on DOW 11K, but I will be watching the COMP and the SOX. Let price dictate your trade, not your bias. Keep an eye on oil as the markets will not tolerate another week of trading above 63 and neither will the consumer. Aggressive traders can consider shorting an opening spike if techs look weak and the VIX hits my lower envelope at 10.12/10.20. Otherwise, let it ride and play with the bulls if they close the COMP above 2328. I am more of a stock picker at this point.
This entry was posted
on Sunday, January 08, 2006 at 6:01 PM.
