Play for Thursday, May 7th

Wow, what a day yesterday. Negative momentum had built. We had gone up over a three day weekend. I, like many, was expecting a retrace down (and to ride it) and to then get into this rally....and got nothing. I got whipped on my shorts yesterday, but made some back on a scalp.

We actually did have a retrace down: as mentioned yesterday, in the pre-open we reached down to the 4300s-4310s, but we never saw those levels again after the open. By the end of the day, we had reached the upper boundary of the ascending channel.


This market has a lot of strength, and the action reminds me of the rally we had in the spring of 2008. We are closing in on the January 6th high, as well as to the upper Bollinger on the weekly chart (4670s and 4590s respectively): the rally in the spring of 2008 failed at the upper Bollinger on the weekly.

For today, I'll be keeping an open mind: a long ambush might occur in the 4360s to 4370s, which was also a previous resistance, but just like yesterday we have to get there. To keep in mind however is the flow of news we have today:

• Bank of England announces rates
• ECB announces rates
• Employment reports out of the US
• Official results of stress tests for US banks released.

Just when we might get a good long opportunity we might also find it's time to get short.