I’m back, baby!

I spent very little time reading the business news headlines this week. I think that’s why I was able to gather up enough courage to go LONG this market after the U.S. labour statistics showed that 95,000 jobs were lost last month. It makes no logical sense for the markets to rally on such news… but it did. The reality is that this bad employment news could be what the U.S. Federal Reserve needs in order to justify “QE2” (quantitative easing, take 2). In other words, print even more money and pour it into the U.S economy. It’s the market’s ability to “climb the wall of worry” that causes so many “market top callers” to lose money. (Myself included!) I’m going to try to avoid the Financial News and other market opinion articles to see if that helps me better navigate the markets.

I waited until about 90 minutes into the trading day before pulling the trigger. I was waiting for the intra-day lows and several moving averages to hold prices up. When they did, a rally commenced and I jumped on-board. I entered a long position in the S&P500 at 1,158.

Within an hour of going long at 1,158, prices rallied 7 points to 1,165. There was a healthy bull flag, and then prices pushed to 1,166 before taking a breather. By shortly after 2pm, the intra-day moving averages “caught up” with prices at 1,161.50, and the rally resumed. By 3pm, prices were back up to 1,165. It was “choppy” into the close, but prices remained near their highs. We settled the day at 1,165.

There’s no doubt that the bulls remain in control of this market. The VIX (sometimes called the “fear index”) fell to its’ lowest levels in quite some time today, which is bullish for the stock market. Gold and oil prices remained strong, which is bullish for the stock market. The U.S. dollar recovered from earlier lows, but closed down slightly today (which is bullish for the stock market). Bond prices were strong at the open, but then fell most of the day before closing in the red (which is bullish for the stock market).

There is resistance above between 1,171 and 1,181. I plan on taking some profits inside the resistance zone, as will many other traders. I fully expect there to be some wild action at those levels. 1,181 is a key Fib retracement level that everyone will be watching closely. At the moment, I feel like this market will be able to overcome 1,171 to 1,174 without too much difficultly. Above there? We’ll see when we get there

I’m back, baby!

Performance of my current trade: +0.98%

Performance since July 27, 2010 (74 days):

S&P500: +4.60%

Me: -8.05% (5 winning trades, 7 losing trades)

 

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