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MARKET WRAP UP 12/27/10

As we come down the homestretch in the final week of 2010, the resilience of the bulls and the market at large cannot be ignored. One top caller after the next has lost credibility with remarkable speed over the past several months. Despite the steep run up since early September, from 1039 to 1259 on the S&P 500, the daily charts of the leading indices and sectors remain constructive. In other words, just because we have gone up a lot does not mean we are coming down quickly–at least for the time being. The idea that sellers will become aggressive this holiday week is likely wishful thinking for those underwater on bearish bets. Instead, it is likely that bears and aggressive profit-takers will wait to make their moves until early next year, if it all.

As for the rest of this week, I expect more slow, light volume trading. Thus, it is key to avoid trading out of boredom.

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The shopping malls are filled with $JWN, $M, and $SKS all making a killing, and $WFMI is banking coin on selling unspeakable amounts of $26 Chocolate Yule Log cakes. To me, though, Christmas is the perfect reminder that America became a great country largely due to its founding on Judeo-Christian values.

Have a safe and happy holiday, but don’t buy too many presents, else face Jimmy Conway…

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[youtube:http://www.youtube.com/watch?v=FVvvkDSXj_I 450 300]r

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MARKET WRAP UP 12/22/10

The slow and steady holiday drift higher has an anti-climatic feel to it, much like many of the hyped Hollywood films that are released this time of year. Inherently, most market players know that the highest probability scenario is a slow motion melt-up into Christmas and New Year’s, but many have a hard time accepting such a predictable ending will actually come to fruition. Regardless of what “ought” to happen, the market simply does what it does, and it is what it is. No trend lasts forever, and the first few weeks of January may very well be a stern reminder of that fact.

In the interim, however, there are–and have been–ample opportunities to make money for those not on the ski slopes, a beach, or stubbornly on the wrong side of the tape.

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MARKET WRAP UP 12/21/10

As the S&P 500 steadily moved higher today to finish up 0.60% to 1254, Mr. Market continues to dish out lessons to those that consider their analysis superior to the aggregate price discovery mechanism of the marketplace. Perhaps it is all one big house of cards, and perhaps there will, indeed, be a day of reckoning. However, that kind of mentality would have seen you miss virtually all of the 2003-2007 bull market, not to mention the bull run since March of 2009. So long as protective stop losses are respected, as well as sensibly locking in profits along the way, there really is no reason why those who consider themselves traders should not have been riding this prevailing trend higher.

As the updated daily charts of the leading indices and sectors illustrate below, the orderly consolidations last week are now resolving higher. As we close out 2010, the final act of this year might not feature a magnificent short squeeze so much as it could a panicky rush to chase stocks higher by chronically underinvested, “cautiously optimistic” bulls.

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MARKET WRAP UP 12/20/10

Although the broad indices had the feel of a flat day, with the S&P 500 finishing up 0.25% to 1247, the 1250 level was hit intraday. Beyond being a psychologically significant price, 1250 marks a fairly precise measured move target from the upside breach of the inverted head and shoulders bottoming formation we saw this summer. One of the best traders outside of the iBankCoin franchise, @OptionRadar, deserves kudos for openly discussing this year-end price target for quite some time.

Beyond the actual target itself, on November 14th inside 12631 I discussed my logic behind the 1250 number. For the purposes of this post, only the first 2:40 of the video is relevant, as the individual stock ideas are now dated.

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Apart from the S&P, there was some impressive underlying action today in the market. While many seem to be writing off the rest of 2010 as a wash, I remain convinced that trading the actual price action is the best way to go. With the type of moves we saw in some of the risk assets today, the bulls may not be done charging into 2011.

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[youtube:http://www.youtube.com/watch?v=elPZYjaHL_Q 450 300]r

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