Does the Market Care About Cyprus? Yes and No

How could the stock market be ignoring a possible confiscation of bank deposits in Cyprus, and a possible collapse of that banking system?

Very good question, for which I have no good answer, but some charts are showing that some investors are concerned.

The EEM, VXX, GLD, FXI, and UUP are showing that some investors are expecting the USA to be the place to be for investment based on global financial news.

XHB and XLU are looking solid, calm and buyable.

The action in the US Dollar is interesting.  The UUP is doing the usual, but if it moves higher above the descending trend line next week, perhaps we have an indicator that the bull market is going to take a breather.

See if you agree.

Thin Ice Here At Support On The SPY

The 10 DMA on the SPY failed today, but we are at support at the 20 DMA .

If we head lower tomorrow morning, you may see selling to lock in Q1 profits.

If we move higher in the AM, the shorts may throw in the towel.  Very thin ice here either way.

Headline risk until now has been shrugged off easily, but will that last?

 

Gentle Pullback/Correction Is On For Now …

I would take a step back and realize that we are pulling back/correcting for now, in a healthy and orderly way.  This is part of every uptrend and it will end with a good buying opportunity.

It is normal to feel like you want to buy stocks when they just keep going up, and normal to be scared to buy after they go lower for a few days or even weeks.  To be a successful investor, you will need to overcome that feeling and when we finish this uncomfortable period of going lower, that will be the time to get in.  You will feel great riding the next wave up.

If you spent all your money on stocks last week when we topped out, you feel silly now, even though it felt great then.  You were the dumb money rushing in at the END of the rally (short term end at least).  Cheer up.  If you have any cash left or if you take stops on some hopefully profitable positions to lock in those gains, you can be the smart money next time and buy when the rally begins, and sell when it ends.

Start looking at stocks that you want to own once this correction runs it’s course.

Orderly Pullback

The markets were just a little nervous today, but I saw no evidence that there is any serious panic.  Why?  I have no idea.

I started some long positions today for trades, and added to the short side as well.

Check back later for some trading ideas.

The Uptrend Is Intact, But Extended …

To elaborate on what I was saying last week, watch the following video.  We are extended above the 50 week average price on the S&P 500, so you may want to wait a few weeks or even months to deploy some more cash until we test and pass that test of the 50 week.

If you trade stocks shorter term, long is still the way to go for now.