Keep Taking Profit While We've Got It

Mixed markets, but rewarding for the right stock picks.

Technical Edge — 

• NYSE Breadth: 33% Upside Volume 

• Advance/Decline: 48% Advance 

• VIX: ~$22.75

It was a quiet “pause” day in the indices yesterday. The S&P finally found its footing and closed lower by just 0.19%. Technically in a five-day rut, the index is holding where it needs to, although there are concerns brewing below the surface. 

This again feels like we’re setting up in a binary situation. If the PPI/CPI/Fed impresses, then the markets can rip out of this pocket and retest the recent high. If that trio disappoints, well then, we’ll be testing lower support levels. 

ULTA, CEG and TLT were in a giving mood yesterday and we are very grateful to keep finding some quality setups in what has been a tough tape. Keep raising stops, keep your position size smaller — especially after a nice run like this — and keep trimming into favorable upside moves. 

Let’s keep it simple with a look at just the S&P 500 this morning. 

S&P 500 — ES

Look at that 3920 pivot. It’s a thing of beauty. As it continues to hold as support, keep an eye on yesterday’s high at 3961.50. 

If the ES can go daily-up without reversing back down, it opens the door up to the 3980 to 3985 area. Above that will have investors looking for 4000, but I’m more interested in 4010 to 4015. Lastly, we have 4035 to 4040, although I don’t expect that today. 

On the downside, it’s pretty darn simple. Lose 3920 and the bulls are dealt a serious blow. It could open the door down to 3840 to 3850 in a heartbeat, then 3805. 

SPY