Monday, April 12, 2010

Round Number Targets

The spx is very close to 1200 and the dow is barely over 11,000.  There are some things that needs to be understood about round numbers. Spx has tendency to decline around round numbers.  Sometimes big sometimes small nonetheless a decline.  I wouldn't necessarily call it correction  may be a pull back.  Should spx close between 1199.5 and 1199.99 that is bullish.  Many will proclaim that  spx was unable to pierce 1200 and should be shorted.  On similar previous instances I found spx was just passing time for may be half a day and getting ready to sprint up by 20 points or so.  For me it is better bet to short at 20 - 25 points over the round number than below it.  Should it close just above 1200 up to 1207 on a single day move that is bearish.  For me while everyone rushes into buy because we now closed above 1200 it is a good time to short.  Either way unless I really want to take extra risk I would wait for DOMA cross and/or  DMRM 1.9% to happen to short.  Today spx traded in a very narrow range.  VIX was crushed going thru very important support levels around 15.60 all indices made new highs.  Bulls are completely in charge.  RSI, PPO showed no signs of  breaking.  The DOMA has to move up to catch up to price.  That means price has to stay flat and move in a narrow range  for a few days before any useful top can be formed.  For the time being I will stay bullish.

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