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Today was tough and was probably the worst P&L day in memory. It involved only three stocks as you know, but the overnight rescue of Europe triggered a massive short squeeze and the stocks gapped up. It was a massive rally and short squeeze, as a major global risk was removed from the market.
The S&P managed a close above the 200 day simple moving average and that is bullish. At one point we will see a pullback, but the trend has reversed and now we will see if the bulls can run this market like a scalded monkey into year end. Barring any big surprises I don’t think the bears have the fire power to stop a further move higher.
We may have finally started the beginning of a trend, as a major piece of uncertainty has been eliminated for now. There will be bumps along the way, but removing an imminent European catastrophe goes a long way in building confidence. So back to business for now. I still think Europe has massive issues and will probably enter a recession, but that will be a conversation for another day.
I entered three longs today: MELA (we did very well with it a few weeks ago and it has pulled back on light volume), RENN (doing well in the after market as BIDU had a good report and may lift some China stocks tomorrow) and KERX, which has a nice pattern on the daily.
Many ETF’s were up almost 20% today, I have never seen that, and many stocks were up 5-10% so I spent half the day trying to find set ups that have not yet exploded. I’m just getting started and if this market is real we may be setting up for an exceptional fourth quarter of trading.
The dollar is imploding and the euro is ripping, this wont last forever, but for now it sets up a major move higher for commodities of all kinds, oil, gold, silver, and agriculture. I wanted to buy some today, but hopefully we will get a pullback soon that will enable me to enter at less frothy levels.
The S&P may in fact have the juice to tag the 1350-1370 by year end. I think the bears had their chance to press and win but they couldn’t do it. The bulls are now driving the bus.
Losses are part of the process, please position size properly as losses will not sting nearly as much. Today was tough because of the gap. Have a great night and I will see you in the chat room in the morning.