The stock market rally of 2013 has been all about going with the flow. Last week's -0.10% decline in the S&P was the first weekly down close since October. As of yesterdays close the S&P is up 27% and up 167% since making its March 2009 low. We believe we have done our best to stay in the bull camp this year and we have avoided the pitfalls of many false starts. The Asian markets closed mostly lower and in Europe 8 out of 12 markets are now trading lower.
Today's economic calendar starts out with the NFIB Small Business Optimism Index, Redbook, JOLTS, wholesale trade, 3-yr note auction and earnings from AutoZone and H&R Block. Yesterday both James Bullard and Dallas Fed President Richard Fisher suggested its time to taper, but the S&P barely budged. We think the S&P is going to continue to make new highs but next weeks final two-day FOMC meeting is going to be a different story.
Our viewWe seen no reason for the S&P to do anything other than what it's doing -- sell off a little and rally. Yesterday the S&P took out its all-time contract high set on Nov. 27. This week the roll begins; the March contract will go front month on Thursday. The roll doesn't really mean much anymore but it does take away from the outright trading. Our view is unchanged: You can sell the early rally and buy weakness or you can just go with the flow and buy weakness. We have 1818-1820 as our next upside objective.
As always, use stops and keep an eye on the 10-handle rule. Don't forget to catch MrTopStep on The Closing Print video found under the OptionsTV page (top bar). We report directly from the SPX pits, wrapping up the day and positioning for trade tomorrow.
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