On Sunday we came out and told our members to get long in the 1126 level on the S&P and told our members to get long on Friday at the 1145 level for Monday.
This morning we told our readers to sell at 1190 and raise cash.
Long term our view is bullish, but we think we will have the opportunity to get long at better levels.
This is what we have said to our members on Sunday: four weeks ago, we determined 1150.00 was a Key Pivot Point for the Index.
Three weeks ago as we entered the week well below that region, I stated, “If the Index could settle above 1150.00 that would produce a substantial buy signal”.
Subsequently it did in fact allow the market to accelerate, as the flowing nine trading sessions produced enough buying interest to allow the September contract to trade up to 1229.50.
However, as trading came to a close last week, much of the gains were erased as market participants became skittish once again off of the monthly employment numbers.
The end result – the September contract re-entered the 100- point congestion zone (see chart), but remained above 1150.00.
As we stated over the weekend, “Settling above 1150.00, this Friday, is vital if the Bulls have any chance of avoiding a weak 4thquarter”.
Game Plan for The Week of the 12th: To state the obvious, the market was concerned there could be a default over the weekend in Greece and some potential terrorist attempts as well. We have been looking to stay above the 1150 as a level to get long, however this gives us little room for error.
The next support is 1126 and if we break that we are looking at 1076, which I do not think we are going to see. For those of you who like index EFT’s, look to get long SPY with a 1/2 position if we see the 1126 level, we are not convinced we are going to hold the 1150 support level.
For our members we are recommending some pair trades for out-performance that have been working well with the VIX at this level.
Game plan for Thursday 15th. Long term we are still bullish for the 4thQ. Look for a day trade around 1182 level. For a long term trade wait for a retest of 1150.
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