On Wednesday, October 13, the S&P 500 hit an intraday high of 1184. To close out this past week, the S&P printed 1183 into the closing bell on Friday. Thus, despite all of the price swings and declarations of a major market top over the past two weeks, that familiar phrase of “correcting in time, rather than in price” continues to be the axiom du jour. Subjective analysis is inherent in all human beings, but that does not mean you should blissfully ignore its existence. Instead, a self-reflexive nature about any bias you may have with respect to the market will often enable you to conduct more constructive analysis.

As an example, let us take a look at a daily chart of the S&P.  You will notice that there are both bearish and bullish ways of drawing trendlines, which one could neatly fit into a respective bias.

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Despite how plausible of a case the bear or bull could make here, we must simply look at the facts. Undoubtedly, the trend since early September has been higher. Bears looking to call tops for anything more than a day or two have been badly hurt by Mr. Market during that time. Until we see some evidence of that phenomenon changing, the presumption is that any period of consolidation and chop will ultimately resolve to the upside as a bullish continuation pattern. For some time now, I have said that a sharp 3-5% correction would come to fruition. However, that could just as easily transpire now, as it could at 1250 on the S&P. Therefore, the safer bet is to err on the side of the prevailing trend.

Below, you will find my top setups for the upcoming week. Feel free to pick and choose whichever ones best fit your style. Please keep in mind that these are trading ideas only. I also urge you to use stop losses in order to mitigate your downside risk. In general, I prefer a trailing 7-8% stop loss, unless otherwise indicated on my annotated charts.

I hope you find these ideas helpful.

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In my video on Friday evening, I discussed the idea that just because the market appears to be extended, it does not negate the likelihood of further upside. While many bears are championing the idea of a better risk/reward profile via shorting the current situation, I urge you to recall the February through April rally of this year, where short-sellers were relentlessly squeezed during the latter half of the run from 1150 to 1219. Seeing as the market has given many indications that it is now trending, as opposed to oscillating in a range-bound state that it was during late spring and all summer, my main focus is to resist the urge to call an inflection point.

At some point, this market will see a sharp correction, regardless of whether that dip proves to be an excellent buying opportunity. However, actively positioning for a sell-off in the midst of a potent bull run is a dangerous game of chicken to play with Mr. Market. With the small-cap led Russell 2000 closing higher each of the past five weeks, I believe the correct strategy coming into this week is to keep one eye on my individual holdings, with the other on the broad indices. Should the S&P 500 blow off to 1200 this week, I would be looking to lock in short-term profits across the board. However, should the S&P churn sideways, I would feel compelled to hold my winning positions, as the market seems hell-bent on correcting in time rather than in price.

Below, you will find my top setups for the upcoming week. Feel free to pick and choose whichever ones best fit your style. Please keep in mind that these are trading ideas only. I also urge you to use stop losses in order to mitigate your downside risk. In general, I prefer a trailing 7-8% stop loss, unless otherwise indicated on my annotated charts.

I hope you find these ideas helpful.

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There’s no time like the present.

Simply put, this is the best market environment for swing traders seeking to ride the prevailing trend since at least late April of this year. The reason why I was so adamant about maintaining a cautious posture (with a heavy cash position virtually at all times) throughout the course of the summer was to be able to preserve enough capital to profit from a healthier market down the road. Indeed, based on the price action and abundance of issues acting constructively, I believe that time has arrived. We have seen leading stocks become extended, consolidate, and then continue to move higher. We have seen laggards begin to catch a bid after working through bases over the past several months. Finally, we have seen high momentum names suffer sharp bouts of profit-taking without upsetting the bullish progress made by the broad indices.

Thus, despite the fact that we are in the midst of earnings season, the bulls have earned more than the benefit of the doubt. In my estimation, there are still plenty of stubborn bears and underinvested bulls who need to capitulate and start chasing this market higher before we will arrive at some form of a top. As the market continues to act better, I am more apt to let my winning positions run. However, cutting underperformers remains a core strategy.

Below, you will find my top setups for the upcoming week. Feel free to pick and choose whichever setups best fit your style. Please keep in mind that these are trading ideas only. I also urge you to use stop losses in order to mitigate your downside risk. In general, I prefer a trailing 7-8% stop loss, unless otherwise indicated on my annotated charts.

I hope you find these ideas helpful.

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Looking at a daily chart of the S&P 500, it is easy to see why many traders assume that we have been topping out just like we did at various points throughout the summer. The market has seen a sharp rally for several weeks, followed by a long period of consolidation, just like we saw in June and August. However, a look underneath the market’s hood shows that there is far more underlying health now than compared to any point from late April until August. Not only have the leading stocks seen bonafide breakouts on stong individual volume (the broad market volume remains tepid, but look at February-April of this year to see how far and long a low volume rally can actually last), but now that many of those leading stocks have had time to rest, capital has rotated over to the lagging stocks and sectors instead of coming out of the market as a whole.

The bears had a golden opportunity late last week to capitalize on Thursday’s intense rejection of a break above 1150. In a matter of hours, we went from 1157 down to 1136 on the S&P. With the ball in their court on Friday, the bears proved to be impotent, which is in stark contrast to the coup they pulled after the June 21st downside reversal. Given the underlying strength and sector rotations that we have seen, I would look to lighten up or even outright remove all short hedges should the bears continue to lack any follow-through to the downside.

Below, you will find my best trading ideas for the upcoming week. Feel free to pick and choose whichever setups best fit your style. Please keep in mind that these are trading ideas only. I also urge you to use stop losses in order to mitigate your downside risk. In general, I prefer a trailing 7-8% stop loss, unless otherwise indicated on my annotated charts.

I hope you find these ideas helpful.

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In both my market wrap up on Friday, as well as in the videos I made last evening, I discussed the idea that the S&P 500 needs to negotiate the 1150 level. We know that 1150 has been a psychologically important price for the past twelve years, but that fact alone is probably not going to give us much of an edge in terms of trading this week. Therefore, we need to be even more precise with our strategy. With many of the leading stocks extended here, I believe the key to this week will be to focus on the names setting up behind the leaders that have not yet exploded to the upside.

Indeed, if we see profits taken out of names like $AAPL and $FCX, and properly rotated over to stocks setting up behind them, such as $ANR and $RIG, then we can have more conviction that there is some substance to this rally. The broader the participation we see, the less likely this rally will be remembered as a short-lived flash in the pan with traders and fund managers simply chasing diminishing pockets of strength.

Below, you will find my best trading ideas for the upcoming week. Feel free to pick and choose whichever setups best fit your style. Please keep in mind that these are trading ideas only. I also urge you to use stop losses in order to mitigate your downside risk. In general, I prefer a trailing 7-8% stop loss, unless otherwise indicated on my annotated charts.

I hope you find these ideas helpful.

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My video last evening revolved around the idea that we are at the upper end of our multi-month trading range. Since late May, it has been a huge mistake to turn aggressively bullish at the top of this range. As you might imagine, sentiment has now turned bullish, and the prospect of chasing extended charts suddenly seems in vogue. While I would welcome a breakout of the range, I will not aggressively position for it. To my eye, 1130 on the S&P 500 represents the last stand for the bear thesis. We closed at 1109 on Friday, and the futures are currently shooting higher. A continued drift higher is likely, but I do not see enough momentum behind the move for me to see a clear edge.

Despite my cautious stance, I am keeping an open mind. More importantly, I am going to be prepared in the event we see a March or July of 2009 type of melt-up. The market does what it does, without regard for any of our wishes and desires. To be sure, it would be healthy and constructive to see a 3% pullback from these levels. However, a nice, orderly, predictable market is usually not in touch with reality. We simply must accept the market that we actually see, not the one that we would hope to see transpire.

Below, you will find my best trading ideas for the upcoming week. I have noted on some of the charts where you should wait for a slight pullback before adding. Feel free to pick and choose whichever setups best fit your style. Please keep in mind that these are trading ideas only. I also urge you to use stop losses in order to mitigate your downside risk–I prefer a trailing 7-8% stop loss.

I hope you find these ideas helpful.

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