I mentioned last week that the objective in the
S & P 500 of 2,093.80 was achieved … and
The question now is where should the market go?
Before I answer that, let me just say that this is
precisely the time to stay with the trend, until
that trend gets broken.
I am seeing more and more so called guru’s saying
that the market is ready for a drop.
That maybe true. But you need to stay with the
trend until the trend is proven to be over.
Just because it is so high does not mean that it
In fact, markets are designed to fool people.
Take Apple for example.
Apple has been incredibly strong. In fact, as I write
this it is up $2.84 today.
I got an email from a friend of mine and he said he
bought some puts on Apple last Friday.
He said he did not risk a lot on the trade and if it
did not work out, he would not lose a lot.
At least he did not load the boat thinking that just
because the stock is overbought it is due to drop.
He bought puts because he felt it was high.
Now, it may just do that.
But, I told him he is far better off waiting for it to
reverse before trying to trade the short side.
You see, Apple continues to make new highs.
So, there is no overhead resistance.
The reason you start to see quick moves at highs
is because the traders who shorted the stock need
to cover very quickly. And that helps to fuel the
move even higher.
I read there where a lot of traders who were shorting
NASD stocks back before the top in 2000.
They were shorting the tech stocks that had no
earnings or prospects for the future.
As it turns out, they were right in their thinking that a lot
of these overvalued stocks would come back to
reality. But, they were wrong in their timing
and lost a lot of money as a lot of these stocks
continued to make crazy moves.
Back to the markets.
The next objective for the S & P 500 is 2,125.
If the S & P can close today above 2,101.62, I expect
2,125 to get hit.
As I write this, it is trading at 2,103.38.
There is less than an hour to go in the trading day.
If it cannot close above that level, then the market could
drop to the 2,086 area.
Keep an eye on it and let’s see if I am right.
I hope this has been helpful.