Bulls Get Everything They Want

Most of the key earnings reports from last night and this morning are being received positively. Stocks like AMZN, MSFT, SLB, AMGN, and BNI are all up pre-market. In addition, the Durable Orders report came out better than expected at -0.8% vs. -1.5% consensus. Pre-market futures are up a bit on the "bullish" data.

The Durable Orders report also revised down last month's data (here we go again) to show a February number of 2.1% vs. the orignal 3.4% reported. The fundies are ignoring revisions and all there implications these days, so if they only want the good news, then there was enough of it this morning to propel the Dow towards a resistance test in the Rectangle I wrote about on the market wrap yesterday.

I speculate that the bulls will feed off the data and make a push towards resistance this morning and early afternoon. There may be some afternoon profit-taking just ahead of the weekend, so be aware of your trades if it gets late in the day and the market is still fighting with resistance.

Here is a chart of the Dow showing the Rectangle (if it breaks to the upside) or Rounding Top (if it breaks to the downside):
(click on image to enlarge)

For all their googly, giddy exuberance these days, the fundies are not as excited about today as the data shows they should be. So keep that in the back of you minds as you position size, there isn't a good reason to get extremely loaded up. A breakout of 8,200 on the Dow (if it happens) would be a reason to take on bigger positions on successful moves and tests beyond the breakout. I smell some trepidation and butterflies with the fundies this morning. It may have to do with the bank stress test, which is a ridiculous assumption by them (even if it's a real concern). They bought everything the banks and government sold them all the way up to Geithner's comments on Tuesday about "more capital than needed." So it seems silly that they would guzzle the kool-aid by the barrels for six weeks and then all of the sudden be concerned about the kool-aid, but emotional reasoning (lack of) is what it is.....

For now, I am assuming at least a modest push towards resistance because the technicals show the move. But I'm also aware that there is a little bit of a news/enthusiasm divergence that shouldn't be there. A drop below 7,925 - 7,950 and the market is probably headed back to 7,800. It would be somewhat significant if the market did drop because the Bulls got everything they could possibly want this morning and they have every reason to buy - at least based on their rationale for the past 6 weeks.....So selling when most news is in their favor would be a bit of a change from what they have been doing the past month and a half.

I will be gone again for much of the day putting together the last stages of the new service. I will check in from time to time as my schedule permits.

9:04 am MT: The Dow pushed to the 8,100 area (about 8,070) and is running into a little resistance. The first wave of buying looks like it will peak out in the 8,065 - 8,070 area on the 5m charts, so this is probably the end of the first intra-day push.

9:06 am MT: The Dow (market) just rolled over on the 5m charts, so the push is done, as I speculated.

The best case scenario for the Bulls is an Ascending Triangle on the 5m - 10m charts (of the Dow) and an eventual break above 8,070 with a run into the 8,100 area or a little beyond. A drop below 8,000 - 8,010 and the market will probably consolidate for awhile until the next move. A drop below 7,925 - 7,950 and the market is probably headed towards 7,800.

I speculate that the bullishness will persist a little longer, so there is still a chance for an Ascending Triangle (or Rectangle) right here on about the 5m - 10m charts, and one more push towards the 8,100 (or a little beyond) resistance area on the daily charts.

9:40 am MT: It was an Ascending Triangle variant on the 5m charts that formed as speculated. The Ascending Triangle popped and ran to a little over 8,080 (on the Dow). The market is starting to get a little weary, so this pop is a chance to lock some partial profits on any short swings from this morning. You should lock down 1/3 of your calls in this 8,080 - 8,085 area, then bring your stops up to the 8,040 area. Take another 1/3 out in the 8,100 - 8,120 area, and save the rest in case the market runs to 8,175 - 8,190.

I must away again, so I will check back later.

10:30 am MT: The price action on the Dow (market) acts like it wants to make one more little push to 8,100 - 8,110. If it does happen, you will want to be out of most of your calls from this morning and then watching to see how the market forms itself for the next wave of price action. You're stops should be in the 8,065 area or so, but be ready to get back in for a late push if the market Bull Flags on the 15m or 30m charts in the 8,050 - 8,060 area. The ideal scenario is a nice Bull Flag right now on the 15m charts that holds 8,070 - 8,075 and we get one more solid pop into the 8,100 - 8,120 area. We'll see how this goes.....

10:39 am MT: There's the first little push I was speculating, this could take the Dow to 8,100 on the nose, and then it's a matter of how much more it can squeeze out after that.

At this point, if you're trying to preserve profits from this morning, you should snug your stops all the way up to just below 8,080.

I must away again.....