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Stocks are finding resistance, once again, at the 1225-1230 area on the S&P 500. Since Wednesday, we have seen that zone provide supply, despite the best efforts of exuberant bulls on these morning gaps higher. If you have been closely following my posts, then you know that I have been largely neutral on the market with an open mind towards both potential long and short setups. My main focus has been on quickly cutting losers instead of going for the big play. I have yet to see much reason to change that posture, although the bulls may finally be able to muster the much-discussed Santa Claus rally if they can get price back above 1225-1230. For now, though, the bulls are not doing it right, quite yet.
From a contrarian perspective, I see more frustration amongst traders than fear or even straight-up negativity at this point. I would not assign too much to that type of sentiment, just yet. When you see “veterans” of the market write blog posts on other websites in condescending tones towards traders who dare to express their thoughts on the market, it reminds me of plenty of old men who thought they had the game of Texas Limit Hold ’em poker mastered, only to helplessly watch me get up from the table on many nights with their chips, and walk over to the cage to cash out. They are frustrated and on tilt, but we may not have seen the whites of their eyes yet.
As I write this, I see the Dow has gone slightly red. I am still in no rush to make a big call here. 2011 has been a year in which I have held heavy cash the overwhelming majority of the time. If you are bankrolled properly, then these are the types of years in the market where your overall discipline and risk management will be your saving grace.
nice video.. chess