S&P 500 close = 1092.91

Signal = BL/S

I don't know how many of you have time to watch the intraday movement of the markets. Those of you that were able to observe the price action today saw that we touched down at the 1075 area, briefly broke below, and had a huge rally thereafter. Yesterday I talked about the 1075-1080 area being our first area of support. The key word in that sentence is 'area.' Beginner traders get hung up on specific price levels. Markets are not run by robots, although some would say majority of the institutional trading happens via automated programs. Given that humans are making decisions, the levels we talk about are just areas where the psychological shift has a higher likelihood of happening. In other words, fear and greed are highest at those levels and one always wins out over the other. So, the fact that we broke 1075 briefly did not mean that we would immediately break down to the next level to 1065. In fact, I sold a decent portion of my position at 1075 knowing that a bounce was very likely. After touching down at the 1075 area, the markets slowly moved up and then hit a temporary resistance at the 1084-1085 area. That is where I placed my final stop to protect the remaining profit I had left. Fortunately due to my stop, my BGZ position got closed for a profit and the markets continued higher. Stops are vital in this game. If you don't use some kind of a stop, you will ultimately get stomped.

Briefly let's talk about the short-term levels. The 10 min resistance is still at the 1098-1100 area. Until we break that, for now the short-term trend remains down. That level will change depending on the price action tomorrow. On the down side, the momentum will build if we break 1090.

On a different note, I want to talk about the longer term picture just for a bit. The markets have come so far since the March 9th bottom of 666. We have had some minor and some major pullbacks since then, however, nothing that has damaged the weekly uptrend. The key support level on the weekly chart is at 1019. Until that level gets taken out or a new support level forms, the longer-term trend remains up. Do not try to predict when the market will break this level, or what the market is supposed to do, or what level the market will close at during a given time frame. I do have a ceiling on the market and that is 1200. Do I think we will reach that before we break down below the weekly support? I don't know and no one else does either. So, for now I am going to continue to trade within the intermediate uptrend and not worry about what will happen by year's end. All I can say is that my long term portfolio remains 66% cash and the other 33% between bonds and commodities. At this point, I have no equity positions in my long-term portfolio.

Levels to watch for tomorrow:

1098-1100 - short-term resistance area; a break of this tomorrow morning will reverse the short-term trend back to up. Be careful during the first 1/2 hour due to high volatility spikes if you execute any trades in this area

1090 - very minor support; a break of this should build some momentum to the downside

1075 and 1065 - more important support levels