Markets continue to hold where they have to in order to keep this rally going. This morning we are seeing more green arrows, some nice follow through to yesterday's strength. The next resistance level to watch on the S&P stands at 1438-1440, then the next level is the September high of 1474.
Some are attributing the strength this morning to the fact we are moving closer to resolution of the fiscal cliff. President Obama and House Speaker Boehner continue to make concessions (the latest being the White House's movement of the Bush goal posts up to $400K in income) and increasingly it appears like a deal is possible by year-end. There will be another important meeting today.
Banks continue to act very well after being a recent focus on Off the Charts. Trim and trail your trading positions as they have given us multiple strategic entries. The first strategy was back in August, the second strategy was when Bank of America (BAC) broke above $10 and then the most recent one came yesterday when it broke out of a tight flag above $10.70. Citigroup (NYSE:C) was the other standout yesterday, surging 4.1% out of a cup and handle pattern. The other financials are all moving well also.
Tech helped to lead yesterday, which is what traders like to see.
Apple (AAPL) had a nice Red Dog Reversal around the $505.50 pivot yesterday. The RDR gave a nice cash-flow long that you can trail with a stop at the low of the day. Now it will be key to see what that reversal leads to. AAPL is currently set to open up around $526, which would fill the gap from last Friday. Here is the write-up with charts I did on yesterday's set-up in AAPL: http://www.t3live.com/articles/market-analysis/3704-what-will-latest-red-dog-reversal-in-apple-aapl-lead-to-.html
Amazon (AMZN) has been best in breed. The next trigger area is $255-256.
Google (GOOG) also continued to move well since breaking the small downtrend around $675.
Salesforce.com (CRM) tacked on more gains and is leading its group.
The fluid fiscal cliff situation is keeping some volume and volatility in the market into year-end, but right now is not a time to be overaggressive. Limit your focus to only the best set-ups and trim and trail winning positions.
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*DISCLOSURES: Scott Redler is long AAPL, BAC, JPM, X. Short SPY.