Not much has happened since our last update as the market has been trading more or less sideways. This consolidation is good for the market as it needs to gather strength after the long rally that started September 2010.
We are bullish just like in mid 2010 during last consolidation and we believe this is the time to enter or add on pull backs in strong stocks. The Market is chopping around giving the trader and investor plenty of opportunities so position yourself for a pending move in the SP-500. But remember, nothing is certain as the market can drop from here if we see further problems with Greece or Italy.
What a experienced trader or investor would do is to enter on pullbacks as this is increasing your risk/reward ratio. Traders and investors are not always right. No one is. It is about making more money on your winners than your losers and by buying after a selloff you are minimizing your risk and maximizing your reward.
During this consolidation we have built a position in some strong stocks that are performing relative well versus the market. These stocks are slightly up but it could be the other way as well. We could have a little open loss on these stocks without worrying as no one can hit the exact low. Besides that we do not look at profit/loss during consolidation as this is more or less random noise. What is important is to be ready when/if the market breaks into new highs.
Just before the market entered the consolidation, many traders and investors were overly bullish. All those people are now underwater and have been for a long time. When they sell out and we have shaken the rest of the week longs the market can resume the uptrend (again nothing is certain and this is not to be taken as a buy recommendation)
SP is consolidating between major support at 1250-1260 and major resistance 1355-1370. Major support is where we last saw buyers stepping in to buy the pull back. Major resistance is where we last saw sellers coming in and stopping the rally. There is minor support at the 150 MA that coincided with the 20 and 50 MA. Ideally the place you should have entered some stocks was when market was at major support. Right now we are close to major resistance. Adding here is giving you a bad risk-reward ratio. We are not predicting if we are breaking out now or we need to test the major support one more time as we can't predict the future no more than you can!
Here are some stocks that have consolidated but all are in an intact uptrend. SLW is in the same pattern as SP-500. HFC has already broken out and thereby already showing relative strength. Last is TSO that consolidated in a flag and broke out subsequent finding support at 150 MA.
Just before the market entered the consolidation, many traders and investors were overly bullish. All those people are now underwater and have been for a long time. When they sell out and we have shaken the rest of the week longs the market can resume the uptrend (again nothing is certain and this is not to be taken as a buy recommendation)
SP is consolidating between major support at 1250-1260 and major resistance 1355-1370. Major support is where we last saw buyers stepping in to buy the pull back. Major resistance is where we last saw sellers coming in and stopping the rally. There is minor support at the 150 MA that coincided with the 20 and 50 MA. Ideally the place you should have entered some stocks was when market was at major support. Right now we are close to major resistance. Adding here is giving you a bad risk-reward ratio. We are not predicting if we are breaking out now or we need to test the major support one more time as we can't predict the future no more than you can!
Here are some stocks that have consolidated but all are in an intact uptrend. SLW is in the same pattern as SP-500. HFC has already broken out and thereby already showing relative strength. Last is TSO that consolidated in a flag and broke out subsequent finding support at 150 MA.
