Looking at the S&P 500 (SPY), some believe that we’re just about to head straight down.  Some believe we’re moving sideways and just pausing and will resume the rally in the next few days.  You can see from the chart below of the S&P 500 that we’re at the top of the downtrend since November and obviously traders are watching this level.  In addition, there has been a ton of volume (side bar) at this price.  So, there’s a lot of commitment.  People that bought in November or December are even after a wild ride.  Will they sell?  Still too early to tell but I have tight stops on almost all positions. 



I’m not strongly playing either direction right now.  I have build a lot of cash recently but still hold positions in a various stocks.  I just have an exit strategy for those positions.  With that said, I’m still looking at what’s outperforming and I keep coming back to the oil service stocks.  Oil has been volatile lately but basically been holding around the $50 level.  I think this is a time to look at the service stocks, not the commodity.  OIH, IEZ, & XES are the vehicles to get long the oil service stocks.  But, as with other trades, have an exit strategy.

Getting back to the S&P, there is what technicians call congestion right now.  That’s a tug of war or indecision on the part of investors.  It doesn’t tell you much but it lets you adjust your portfolio for the next move.  Stay in strong stocks and avoid weak ones.  This is not time to think long-term unless you hedge your long-term holdings at various times.

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