For a week now I have been stalking this move higher. It was lurking out there in a maze of negative European news. Today we finally get that long-awaited Santa Claus rally. This, folks, is all we may get, a move from just below 1200 on March S&P futures contract to just about 1250 at the highest point sometime before this week is over. You better use this opportunity to cut your losers, take profits on your winners, and just go flat and enjoy your holidays. Why do I say this? Simple and systematic approach to what many may view as schizophrenic market moves. But in reality, there were endless amounts of open gaps on various indices and important individual stocks that needed to be closed. They were all filled yesterday, and therefore gave the bulls an extra might to carry the prices higher and punish the late shorts. I view today's move as a gift in problematic and puzzled market, which will be just as hard to read in the beginning of 2012. I will not even dare try to guess when the S&P downgrade of EU AAA countries comes. We could be within days if not just hours (as I thought earlier last week) from a swift EU debt crisis-driven equity slide, which will take so many by surprise, again.
So I say: take profits on 1/2 right here @ 1234, move stops to b/e, take profits on all ESH2 @ 1250, reduce your risk in illiquid market, and rest through first trading day in January. It would be 16 points short of what I thought we would do, but good enough for confused market conditions.
Spend time with your family and friends. Reward yourself for hard work during the year. Celebrate your achievements. Be safe, be wise, be flat soon...
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