After the (Perfect) Storm
Well, folks, we didn’t quite make that 500-point gain in the Dow yesterday, but we did see one of the biggest moves in equities in quite a while thanks to that perfect storm of events, capping off what appears will be a very, very big month. I was looking at some numbers, and if we can keep the Dow within 50-100 points of where we are now, October 2011 could actually be the best month since 1974. How about that?
Early in today’s session everything is either down nominally or flat, which is both healthy and to be expected after a run. I say all the time that never move in a straight line, so it’s important to watch these ebbs and flows and understand the opportunities that come with them. For instance, now is a wonderful time to roll your protection up a little bit. As the fear in the market comes off and premium prices drop, it’s also a good time to go shopping for insurance down at those lower levels. That’s the way the pros do it, and there’s no reason you can’t do the same.
I’m very curious to see how this market acts later in today’s session, especially after Europe closes. Pressure on the Euro is causing a lot of those portfolio managers across the pond to take profits as they wind out their week, so let’s see if our guys will step and reverse this early selloff. We want to see a market that opens down grind its way higher over the course of the day—if indeed we see that kind of action today, that would be very bullish.
As he does most every week, Howard Marella of Index Futures Group stopped by the studio this morning for Futures Friday. Howard talked about some key support and resistance levels to keep an eye on in the S&P, and since he’s one of the best traders I know I tend to listen to what he says.
As far as support, he’s looking at 1262 in the front-month futures contract, 1265 in the cash—that’s how much more we could break and still have this market be good. In terms of resistance, he wants to see things settle above the 1282-89 level in the futures, 1285-95 in the cash—if that happens, the melt-up scenario could be back on. Very interesting stuff as always, but, folks, please make sure you do your own homework before you get into any trade.
Don’t forget, folks: the Biz 880 Miami Money Expo, November 3 at the Mayfair Hotel in Coconut Grove, FL. Join me, Daniel “The MoneyMan” Frishberg, Bull & Bear Institute and other financial experts for this FREE event, featuring breakout sessions in futures, stocks, real estate and more. Your ticket includes a FREE lunch care of Charles Schwab. Register now!