How you play this depends on your overall orientation to things. If you are bullish, Friday was a buy opportunity above Thursdays high. You can see a quasi exhaustion move in the momentum indicator on the downside with price holding up pretty well. This could very well have been a great buying opportunity. If you are more oriented to thinking the market is due for a correction ( yours truly ), you would be looking to short the rally here. It was a no brainer that the PPT was never going to allow this thing to roll over on a Friday. They are well aware of the history of Mondays following very weak Fridays, when a market is on the verge of rolling over. This was a good spot for them to draw a line in the sand. Whether or not they were behind the rally on Friday, I cannot say. It was not an obvious PPT save in my view, the market was strong right from the get go and did not have any mysterious buy programs that I could see at suspicious times.
The one thing that has me a little concerned is the similarity to 1987 that we have going on here.
You can see that we had the same type of scenario brewing, stocks going up on light volume, creeping up day after day, while bonds crashed. You can see we then broke the uptrend, moved sideways for about a month, then boom. I doubt we will see anything like this, but I keep coming back to his for some reason. I think it is mostly because the big bond selloff got me worried a bit about the stock market. At the very least, we are taking a breather here and valuations are very high now, so it is not time to be aggressive on the long side.
If the Fed's plan is truly working we are going to 20k or more in the Dow in the next several years, so there will be plenty of time to get a piece. If this thing can really run on it's own after they back away, we will truly have confirmation of the biggest bull market of all time. I have my doubts to say the least, but never want to be close minded. I could easily be long from Thursday's high on Friday, but chose not to take that trade. Time will tell if that was wise or not.
I am flat except for a few stock shorts I put on last week, and do not see a futures trade anywhere on Monday. I am going to be traveling next week through Wednesday, so my posts may be brief. I will try to post regularly, but the times might be off a bit from my normal. I also have different software on the laptop, so the charts may not be quite as good.
In general, I am looking for Crude to come back in a bit. I am also watching the metals closely to see if Gold and Silver are setting up buys or are rolling over. Copper also, I am looking for a short on this bounce, it has already bounced back up to where I shorted it and it is the weakest metal here. I am also watching the Grain markets for sell signals on this bounce.
This will serve as Monday's post.
Good Trading to everyone next week