I'm Bullish, Then Bearish

The inside day resolved itself to the up side. When the S&P 500 Index hit its high of 1277.63 today, I knew that 1292 was the next and probably final stop for this Bull Run since July 1, 2010. So, I'm bullish on the market until the S&P 500 hits 1292. A correction should follow 1292. Then, I'm a raging bear. When the correction is complete, it will then be a good time to buy.

The way to beat the S&P 500 Index is to wait patiently for corrections. Ideally, we want to enter the C Fund when the Index falls below 1257. If we buy when the market is making fresh, new highs, we stand the risk of having to patiently wait out corrections.

If I had to call a date for 1292, my odds on favorite would be tomorrow, January 6, 2011. I will be looking for a trend reversal tomorrow.

The open for today was 1268.78. The low was 1265.36. The high was 1277.63. The close was 1276.56. The close was very bullish because the market opened low and closed near the high of the day. That is a bullish development and portends higher prices tomorrow. 1277 is significant resistance and, in my opinion, the next to last significant resistance before 1294. Our high today was right at 1277 resistance. Given the close one point below 1277 resistance, the probabilities suggest that tomorrow will see the Index clear 1277.

The 1289 to 1294 zone is a selling zone. Let's see how the market reacts in this area tomorrow.

Q: Do I think that the release of the employment report on Friday makes a difference? No. I am a strong believer in technical analysis and Elliott Wave Theory. I think that the good, the bad, and the ugly about the employment report has already been priced into the market. What will matter is the market's reaction to the news on Friday, not the news itself. Remember that if the trend changes, even a good employment report will be ignored and discounted in a Bear Market/Down Trend.

All the best,

Wink

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