End of the Month

The S&P was up 2.2% for the month. The best January since 2006. Nothing seems to take this market down. Friday was just a chance for the longs to reload. I am usually a skeptic of moves like this, but with Gold on the decline and the Euro on the up and up it is hard to fade this rally. The market is just telling us that there is very little risk in the currency market. This just points to a solid stock market. The opening range for Gold in 2011 is the high of the year. That is very bearish and I hesitate to say that Gold might be in for a real correction. The S&P opening range for the year is the low of the year. That is very bullish. The trade right now seems to be long equities and short gold. Todays trade was a grind up. The market opened up today and never really tried to sell off. It was surprising to me not to see any selling on the close. The market is just bid and will continue to stay bid as long as we are above the 1255.25 low for the year. The one x factor for this rally could be that the VIX is now above its 50 day m.a. and did not sell off much at all today. I will be watching the VIX closely. My daily pivot in the S&P is 1282.25. We closed above that today. The bulls are in control. We should trade up to 1299.50 if we can sustain trade above 1282.25.

Correction?

Not sure that I am in the camp of a correction in the market at this point. I believe that the market sold off due news in the Middle East. Until the market takes out opening range for the year at 125525 (which is also the low of the year) I am bullish. I felt that today the market should have went lower if this were a correction. The Dow only being down 166 is not that big of a deal. Depending on what news we have this weekend I believe in buying dips on Monday. I have been noticing that gold is fading the S&P this year. The opening range for the year in gold is the high. That is the exact opposite for the S&P. I will be watching to see what happens in gold. I believe that lower gold prices will be even more bullish for equities because it takes the risk out of a currency crisis. Even though everyone seems to be thinking that a weakening dollar will cause the stock market to rally, I would rather be watching gold. Gold is now trading like a currency. If gold takes out the high of the year what will happen with the stock market? I believe a new high in gold will be the reason to become bearish on equities. So until then, I am bullish.