A Little Somethin' for Everyone

Bears, bulls; stocks, commodities -- everyone has something to eat.

Technical Edge — 

• NYSE Breadth: 77% Upside Volume

• Advance/Decline: 72% Advance 

• VIX: ~$20.75

Don’t let anyone tell you that the action here has not been tricky. Monday started off with a huge upside burst and subsequent rotation, then a massive fade. We stated that we did not like buying upside rotations in this type of tape, but laid out a few trades for just such a thing. 

We’re lucky that our prep work is paying off, but I can’t shake this sense of keeping my guard up — Maybe it’s with the binary nature of the CPI print tomorrow.

The bulls are again looking to gain control near the open. For those carrying open longs, consider it an opportunity to trim into strength and ahead of the CPI. 

Because the CPI report has been such a big focus lately, it’s one reason we have been trimming down our individual stock trades so quickly: to reduce risk and put away profit before a potential “change in tune.” 

Let’s look at the indices, pay special attention to our Open Position adjustments, and look at a reset trade in Berkshire.

S&P 500 — ES

The ES held where it needed to, bouncing off the 10-day and 21-day moving averages. From here, let’s see if it can hold up above the 3940 area. 

If it breaks back down, 3920 to 3928 is a key area bulls need to hold as support. Below it puts 3900 in play. 

On the upside, a move through 3956 puts this week’s high in play at 3973, then the 3985 to 4000 zone. 

SPY