Yesterday the SPX gravitated to the 1390 handle I’ve mentioned several times this week. It is no doubt pivotal for both bulls and bears. Equity bears are in the Hurt Locker here; while it won’t be an easy push above 1390, the upward movement will ultimately come from relenting bears and diminishing downside pressure rather money from the sidelines.
Today’s Overbought / Oversold levels come in at 1391 / 1361(quantitative, not technical). The range has opened up quite a bit from the 10 handle range of the last several days. Yesterday, we opened up into Overbought conditions and, as I said I would, removed some equity exposure. The SPX remained within a five point range all day, so the risk of taking inopportune gains remained minimal. I do not want to be short this market as I still see new yearly highs on the SPX by mid-May.
Eventually, there will be an opportunity I want to take. Over the coming days, I will be looking for limited downside and for market participants to interpret any news as good news.