Not to get too complacent..

Early on today,  the market felt like nothing can go wrong and we can slow grind to SPX 1500 in about 9 months.    Well, as sarcastic as it sounds,  I'm sure some of us have felt that way even just for a second or two, lately.    Truth is, we'll have lots of bumps and obstacles along the way to whatever the eventual top this market will reach.

Although the market ended in green, many plays actually ended in red as fatigue set in and money flowed out of stocks. As always the bigger changes in price movement are more evident in high beta names (Casinos/China's).   Still, recent alerts here of earnings plays keep grinding higher PLT, ROVI, MFB.    Such is the nature of this market, one minute we can be all relaxing under the sun and next thing you know a storm comes which ruins the day.   No real late catalyst today, so maybe just a drizzle as the market finished off the highs and has yet to join NASD/ R2K in making new highs.  If there is any concern,  it is this failure to join the party on part of the SPX and maybe why some money came off the table.  Still, so far it’s only one day late, BKX  hanging at multi month highs is probably a big signal as to what's next.

In all honesty, as long as we bring our "umbrella", we should be prepared for any storm that comes our way.    What does it mean then?   It means that we can expect for this market to pullback as soon as people start to get complacent.   In a way, this is healthy behaviour.   Some of us would love to get back into some plays at a much attractive price.    We believe we'll get our chance, sooner than later.    This is the kind of market that does not go up in a straight fashion.   It may have a mini stretch of a bull run, but it will always stop at some point.  The ground this market gained will be tested and we have important level at SPX 1150 to retest.

Over the next couple of days, we have some important Econ. data coming from China.   Those data points can very well be the tipping point we need to move this market higher or not.   In the meantime, we aren't expecting much news from our home front this week as noted earlier this week.     Bottom line, we are begging for some more sideway action before we can give 1150 a real attempt.

..all over the place..

One thing we all have to be clear about is that whatever the Euro rescue package does, it doesn't mean that things are all of a sudden hunky dory for the Euroland or world markets.     The fact that they needed to prepare such a huge amount to cover the potential default of various countries is something that will be scrutinized to the hilts.  We (markets) are in a wait and see mode.

Technically,  this market needs some time to settle down from last week's shenanigans.  Just today, after a bad open, we posted a chance for some buying to come in an it did with a 200DJIA/60 NASD point reversal to highs of day.   Unfortunately, a late sell off finished the market basically flat.   We actually made it as high as SPX 1170, but lets be honest here, it’s mostly very short term traders participating.   If this was the conviction buying off lows we‘re looking for, we’d have closed nicely in the green.  No specific reason/catalyst for sell off,  which is possibly good news.   As we’ve said the last 2 days, profit taking will ensue as there are people trapped from last week that would like to exit this market (1175-1180 is seemingly the possible high short term).   We think this (profit taking) was the main culprit.    Right now, this market may simply trick you into thinking that all is well and than boom!.   The fact of the matter is, that we are still going through a May correction and there are a few weeks left in the month.    We are sensing most of the longs are doing the waiting game like DJIM.   Looking at the sectors out there, it was some of the consumer discretionary plays along with some retail/auto plays that led all sector gains by noon. (>8%), but sold off to flat.   The worst were metals excl. gold of course, as China curbs/ hot eco.numbers overnight hit the coals, steels.

Now is definitely not the time to be emotional when it comes to trading decision.   There was a lot of technical damage done to the market and we'll soon have an idea where it'll establish the support.   Recent DJIM addition, VCI  made a new high while MFB  from last Q’s winners came out with a nice report and made a new high.   For the next little while, we may just have to continue and avoid some of the heavily followed names, while trying to trade some of the lesser known names like VCI types that are good earnings and/or charts.

Bottom line, most are curious to see how much this market will give back of the 400 pt gain by the end of this week.   More importantly, knowing what this market is going through gives us an advantage of what to possibly expect.

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