Play It Again, 2010

The bulls win the first session of 2010 and what a strong start it was. As you'll see in the /ES channel chart below, the 75% line acted as resistance today and capped the rally to new highs...

The next chart shows the 30 day, 30 minute chart of the S&P and you'll see that prices are now back above all short term moving averages...

My line in the sand for this rally was 1121 and that has now been left behind. If I were forced to pick another spot it would be north of 1200, but I honestly can't see that happening without a more serious pullback easing the bullish sentiment extremes. Fortunately, I don't need to know where we're going to be able to trade this market successfully, but I must suppress my bearish bias (for now!) and trade the price action I see.

Today, nothing surprised me more than the weakness in the dollar. There were basically two theories behind my short term bearish stance. Number one, a strengthening dollar and two, the technical level of 1121 on the S&P. I already mentioned 1121 getting taken out and when I saw the dollar roll back lower and confirm a lower low on the daily chart, I decided to bail on the short positions.

Is the dollar rally over?...

Given the above, I grabbed a few more long positions for the portfolio today. Additionally, as you'll see below, the list of set-ups ready to confirm breakouts continues to grow...

CNX

DTG


DRQ

RKT

SWI

SHOO

VIT

VMW

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