Hi there, and welcome back to CRI's S&P 500 blog.
Through this seasonally good time of year for the economy in general and equity investments in particular, it is not surprising to see the SPY move up to our previously stated upside objectives. While the weekly bull flag target was hit rather briskly, the market came within a whisker of the monthly target before backing off here recently. The recent pull back probably represents a good place for traders to move their collective stops to lock in a good portion of the late winter early spring rally. While I am still looking for another burst higher here in the short term, one must appreciate both the seasonal nature of stocks and the sheer distance of this latest bull run. Interestingly, a 50% retracement of this bull run would bring us right back to about where the original buy level came in - but we will leave that analysis for when the market does indeed breakdown.
Trader Stance: As stated above, traders ought to move their stops on the remaining half of their long position [exiting first half upon hitting the first upside target (136.71)] to just under the recent lows (135.76) and exit should the market break below this important pivot area.
Investors Stance: Investors have been long since last fall (when our time tested indicator - that being the relationship between the weekly 13 EMA and the 30 SMA - turned bullish) and there appears to be no reason to change that stance as of this week's close. While price may fluctuate for a while in our current trading range, collect dividends and know you already have a capital gain buffer to absorb any short term pullbacks. As long as our moving average relationship remains positive, stocks are an ok place to be.
That's all for this week,
Brian Beamish FCSI
The Canadian Rational Investor
the_rational_investor@yahoo.com
http://www.therationalinvestor.ca/RI_Tradents.php#sp500bloglink
http://www.therationalinvestor.ca/RI_Tradents.php#sp500bloglink
