IÂ can’t say that we haven’t had some nice intraday, and for that matter, interday volatility of late. For those who were able to take the leap and getÂ long from 1160, and remain long, it’s been a nice and profitable journey. I got long a bit near the bottom, but not nearly as much as I would have liked in retrospect, and also took profits too early. In short, relative to the index, I’ve underperformed, which is irritating, but not nearly as upsetting as losing money. As a former colleague used to exhort us, “If you’ve got the hunch, bet a bunch!” Of course, we were playing with other people’s money.
So, we’ve moved 9.3% from the low (1158.67 on Nov. 28) to yesterday’s high at 1266.73. That’s a nice run, and given the uncertainty in Europe, which may or may not be resolved by this weekend, it isn’t suprising that we’re treading water today. If today’s action results in the formation of an inside vertical bar, that should help toÂ indicate theÂ near term direction. We’re till 2.9% shy of the 1292.66 high reached on Oct. 27, and I’d certainly feel more comfortable if we had a real test of that level, whether it succeeds or fails.
I’m finding it difficult to do anything longer term at the moment. My bias is rather negative, as I very much doubt that the Eurozone officials will be able to put a viable plan in place quickly. Still, I could easily be wrong, and as Todd Mitchell often notes, a bias means nothing as far as recognizing setups and entries goes. It appears to me on the daily chart that something in the 1225 area has a chance to provide suppport, although as might be expected 1200 looks more robust.
One thing that I keep repeating to myself is that having reached the 61.8% Fibo level on the most recent pullback, the SPX wouldn’t necessarily be expected to retest the previous high, and consequently buying on a pullback is relatively risky. Given the amount of headline risk that’s present at the moment, tight stops are probably a good idea in any case.
I hope that everyone is doing well in what have been pretty challenging markets; best of luck.