SPX 1203 - SPY 120.35 area- short term top?

Going back to the February reversal that started this move up, the SPY bottomed intraday at 104.58, and this was the midpoint of an inverse head/shoulders bottom. We traded pretty much exactly on the neckline, pivoting higher and lower off of the 112.50 area for almost the whole first week in March, before finally closing above 112.50 and the neckline on Thurs 3/4, then followed through with a gap up on high volume that Friday and now here we are 75 SPX points later. SO, using your standard head/shoulders price target estimate, (112.50 - 104.58) + 112.50 = 120.42. This morning, just before retail sales and CPI were released, the SPY pretty much stalled out of a rapid rise right at 120.35....finally broke through to 120.40, quickly printed 120.45, 120.49, then was back below 120.40 before you could blink. Now its only been a half hour, but the price action in the SPY certainly looks a lot more sluggish and seems to me we might see a significant move lower at some point today. Anyone else watching this area for a short term reversal? We're also staring right in the face of the 62% fib retracement of the multi-year down move on the SPX too--that sits just under 123 on the SPY. So if we do break above this 120.45 area, there's only about another 1% or more to go before hitting what should be a heavy dose of technical selling action. I'm still long, but will be taking profits early, and turning that capital into some short plays right into the open here. I'll stay net long though unless we close the gap we just rode up overnight into today. good trading out there

Looking at Europe... They peaked about 8:45 Eastern and lost .5%.. Don't know what caused this action... Did see a big jump in shorts in Rydex Funds this morning from yesterday.... Some people are saying the Government is going to start selling C today.... Don't know if we will see follow thru today on more rising due to okay retail sales and INTC... Barry

I'm still long, but will be taking profits early, and turning that capital into some short plays right into the open here. I'll stay net long though unless we close the gap we just rode up overnight into today.

good trading out there

No Top.

Looks a little toppy on SPX punter... Still too early to tell.... With such good news, wouldn't you expect a bigger follow thru than SPX up 4 points... Barry

Looks a little toppy on SPX punter... Still too early to tell.... With such good news, wouldn't you expect a bigger follow thru than SPX up 4 points...

Barry

Yes this was one of the worst ideas I've had in a long time. Luckily I didnt even get too far in converting long to short before realizing I was dousing myself in gasoline and about to run through a bonfire. But I did buy some SDS calls at about 10 min til 10, which I promptly sold less than half an hour later after seeing a very high volume long reversal bar on the SPY one-minute chart. Actually turned a microscopic profit but problem is I sold some Marathon oil 32 calls to free up some cash, and those ended up DOUBLING today, so opportunity cost haunts me still at this hour.

As far as Citi, whether you're bullish or bearish on the market, theres been no reason not to own it for the last month or so. About 4 weeks ago there was a huge huge trade in the pits involving the sale of 250,000 April 4 put contracts, that was my clue to get long some near the money calls. I bought the $5 may call the day that contract started trading, and recently added some very speculative april $5 at about 1 cent per contract. These have been my most profitable trades in the last four weeks...just unbelievable volume and percentage moves in the Citi $5 calls, first the May issue earlier in C's run, and then today the April finally broke out trading up to 7 cents/contract after being a one cent lottery ticket for the last month. But my point in mentioning C is that the govt selling is bullish to me--they'll have their pals at our largest financial institutions "support" the stock price so that they can unload it at the best price possible. Hard to tell if/when that started just yet on the chart, since the stock simply goes up from 6 am to 8pm everyday without stopping for bathroom breaks even. Our govt and these banks are way to chummy for me personally, but knowing how they operate, such as this "rally" in Citigroup despite the largest stock sale in history, is a small perk I guess.

Back to the market though--Now I'm wondering if the 62% retracement will even generate any selling. IMO today we saw volume spike up and some decent breadth because we broke through a level that had some significance--at the 1203-1205 area, and there was probably at least SOME short covering from guys shorting above the trading range we were in. So I dont make much of the uptick in volume today, but I am taking note of the market's ignorance of normal price targets on reversal patterns.

UNLESS, today was the classic head fake and what would be one hilarious bull trap. Entice everyone into earnings season trading with a blowout day, that historically in this rally has caused a selloff. Then pound 'em to bits the very next day. I actually added a few shorts into the close just because Im a conspiracy theorist and I completely believe the market making banks would do this. This run has to take a break soon--and the oldest trick in the book is to make your move when the market doesnt expect it, not at the precise time they expect it. Translation? Pump the market today sell it tomorrow. we'll see.