S&P 500 close = 1109.30

Signal = L/L

Position = N

Markets keep surprising you when you least expect it. Today was another big upswing day that many people did not expect, including myself. In fact, I did something I rarely like to do and that is hold a position over the weekend into Monday. I unfortunately bought some TZA on friday in after hours and decided to hold it to the open on Monday. Needless to say I covered my position immediately at the open. Luckily I had a fairly small position, so no big loss.

The markets seem like they have no ceiling and that nothing will stop them from continuing to go up. When it starts to feel like that is when you have to question what is really going on and who is really buying. As much as I would like the markets to correct by about 10-20% from the current levels, that may or may not happen any time soon. However, there are a few key levels above that are going to be important to watch. The first level is at 1121 area which is the 50% fibonacci retracement level from the 2007 high of 1576 to the 2009 low of 666. The next level of resistance on the daily chart is at around 1200-1228 which represents the 61.8% fibonacci retracement level. On the opposite end, the most recent significant daily support is at 1029. So, what is going to happen a few weeks from now? I don't know. Let's talk about what may happen in the next few days.

Clearly, the long and short-term trend are now both up again. So, the shorter term picture looks bullish. The short term level of support is at 1088 and the short term resistance is today's high at 1113. Tomorrow, look for the markets to pullback a little before resuming upwards once again. That may be a good time to enter a quick long trade. Levels to watch for tomorrow:

1113 - minor new resistance

1088 - decent support area for now