Option Investor
Market Updates

Stocks continue to trade strong

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After some profit taking near the open of trading, stocks have continued to show signs of strength. Several index and sectors we watch have triggered upside alerts at retracement levels and we continue to monitor these levels for further signs of strength or potential weakness.

S&P 500 Index - 60-minute interval

Looking at various timeframes gives the trader some information he/she might not otherwise get when just looking at a daily interval chart. We might expect some near-term resistance in the SPX here at the 1,082 level. The 200-pd MA on this chart currently resides at 1,086. A trader looking to add further bullish trades to their portfolio may take a wait-and-see approach to thing and look for a move above the 1,085 level before getting further bullish. Traders that are carrying some nice gains that have "overachieved" may want to get aggressive with some of those trades by snugging up a stop. Risk on the above chart for a bull may be on a pullback to the upward trending 50-pd MA (currently at 1,032) or 80.9% retracement at 1,011.

Continue to monitor risk/reward levels in your trades. Remember where you've been and where you are. This will help you keep a level head and help keep you from getting emotional and making a wrong decision that could hurt your account.

Jeff Bailey
Senior Market Technician

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