Market Wrap Up 04/08

The $SPX gained 0.34% to finish the day at 1186, as we continue to consolidate right around the highs from the most recent leg up that started in the middle of February.  The chart above supports my still short term broad market view that we have some more backing and filling to do, as the Full Stochastics are pointing down.  To be sure, the overarching trend is up, as we remain in a cyclical bull market.  Thus, even during periods of consolidation there are pockets of strength and very strongly performing issues, as I illustrate with charts in my “top setups” posts each night. However, this is certainly not a market where you can indiscriminately buy equities across the board and expect to see appreciation. As I noted yesterday, selectively aggressive traders will profit the most in this market.

Another thing to keep in mind is that earnings begin next week.  $AA reports on Monday after the closing bell, and for those of you who have been complaining about the lack of volatility, your turn to shine could present itself then. Understand that we could test 1150 or even 1120 and STILL do no major technical damage, assuming those level held, because we would be comfortably above both the 100 and 200 day moving averages. (See Chart BELOW).

To sum up my short term strategy, you can, and should, still be playing the strongest looking charts. However, going into earnings next week I believe you should have a decent amount of cash on hand to take advantage of the volatility that I expect to reemerge starting on Monday night.  Cut your laggards and keep stop losses relatively tight.