There is a decent trend-line to trade around in Dow futures. 16413 is today’s high. Intersection comes in at 16,425.
There is probably 100 pts above and below the trade will try to explore. 16179 was the low yesterday and Monday. That looked like a decent break to buy at the time (see below).
If you bought it, move your stop up and forget about it.
I have no idea if we are going to scream to new highs. Its a toss up. There is a lot of money on the sidelines. If that comes in , logically, we should have some more upside.
When you are moving in to uncharted territory, trying to pick tops by selling new highs can be a double edge sword.
I will say that there is still a level of bearishness and dis-believe that this rally can continue. Fed statements yesterday were pretty hawkish. We have unemployment issues, etc etc. We have the issue with the looming battle over the budget.
Yet the market grinds higher.
A lot of folks I talk to are looking for “at least a 10% correction”. Obviously a lot people would like to be short before that correction. They could tout that sale for a long time if they catch it right.
My gut tells me that we won’t have a correction as long as people are looking for one. Kind of twisted logic, but with markets at new highs, you have to look at sentiment more than the technicals. It seems like enough people are still cautiously bearish at these levels. That generally ( not always) means we still have a wall of worry to climb.
I’d stay long, but I’d have cheap puts under the market to protect these levels.
CER