PRE OPEN STUFF

Yesterday, the markets continued their unabated march higher to what I would consider uncharted territory. Lots of folks have discussed the 1350 area as significant resistance and it might be; I just don't know why. What I do know is that every sale has been bad and every covered short was a godsend.

Generally I find Jeff Cooper's commentary on realmoney.com to be fairly unusable. Today however there is something that I found interesting. Here it is:

"The Dow broke to another new record high, but some poo-poohed the move, and in my opinion for good reason. It is what it is, but things are not always what they seem:
The average Dow stock is 31% off its all-time high.

The median Dow stock is 36% off its all-time high.

The Dow's move to a record new high on Wednesday may yet prove that the emperor has no clothes.

Although the breakout is obviously affecting sentiment, and it is hard to tell how far sentiment can carry, it is also creating the kind of psychology emblematic of the optimism necessary for tops -- if that in fact is what the agenda is.

Although the Dow record is somewhat phony, the divergence between other broader indices, as well as the Dow Industrial and Dow Transportation indices, is real.

Moreover, despite an ISM service sector report that came in weaker than expected on Wednesday, the market rallied. That raises some questions.

In addition, the market was quick to rally off Fed Chairman Ben Bernanke's comments on Wednesday about the housing market slicing 1% off GDP. The interpretation was that the Fed would be cutting rates sooner rather than later. The drop-off in housing is hardly news. It seems to me a stretch to interpret that simply because Bernanke mentioned it that he was somehow telegraphing a cut in interest rates.

Yet the market ran with the ball, and traders will ask questions later. That is the nature of bull runs. The market has its own internal agenda.

And one very good possible target for that agenda is 1350 S&P."

Cooper goes on and on about square outs and fancy calculators but the bottom line is he sees this area as major resistance.


My take, how bout this, we are in a strong uptrend and the markets are overbought and the major market indexes are doing better than the typical stock. Pure gold in those words. Now technically, all the momentum indicators are overbought and the 2 day RSI on the SPX is back to a way oversold 92 after taking a short breather for a few days.

Volatility indexes are not giving buy or sell signals as they are at and have been at levels where they generally do not go lower. The VXO is at the 11 and the low over the past several weeks was 10.34. The 10 day SMA of the VXO is 11.18 and getting oversold from here will be tough without another 200 point DJIA rally.