810 Or 820 Looks Likely

I said yesterday in my post that the S&P 500 could get to the 810 or 820 level during this rally.  That may still be the case.  If we get to those levels, that would be another 6% or so from where we are today.  That would be a pretty nice rally from the bottom.  At that point, we’ll be at the top of the downtrend starting in November and we’ll be at the 50-day moving average.  It’s a natural place for sellers to come in aggressively.

Believe it or not, we’re now overbought.  But being overbought doesn’t mean it’s going to go down right away.  That’s very important to remember.  When investors continue to buy the dips or overbought markets keep going up, that shows real strength.  This rally has been good.  All the internals I look at are improving compared to previous rallies. I’ve nibbled on this rally but haven’t gone in very heavy.  The lower risk trade is to buy the dips assuming they are mild.  But, so far, we haven’t really had any pullbacks.  Just keep in mind that as I said yesterday, markets don’t go straight up or down.  So, let’s enjoy this run and be glad we’re not short.  Remember, even if we get a multi-month rally, do not believe we are starting a new bull market.  None of my work suggests that.

For higher percentage trades than the general stock market, I continue to like going long copper and shorting the dollar using various ETFs.  They were both weaker today but if we get a pullback in the overall market, these can still go up.  I want to continue to look for independent trades or trades that don’t require the S&P 500 to go up to make money.  Copper, the commodity, and a weak dollar can both do that.  

Radio Show

I was picked to be on a jury so I will have a substitute tomorrow on my radio show.  I’ll be out for at least one more day.

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