s$p to "blow past upper-end resistance"

Discussion in 'Trading' started by S2007S, Dec 2, 2010.

  1. S2007S


    Of course after huge up days everyone takes into consideration that stocks cannot go down, its the mentality everyone seems to have on wallstreet when stocks only go in one direction. Between the VIX falling and all the other hype about the s$p breaking 1228 and stocks being "cheap" there is only way according to the wallstreet pros and that way is up and away for stocks.

    Who is buying up this market, how anyone can say stocks are cheap in my opinion is pretty foolish, I mean thousands of stocks in the last 2 years are up hundreds and hundreds of percent and there are dozens up thousands of percent, I think the risk outweighs the reward with the market up this high, yes it can go higher but there is more risk to the downside. The only thing pumping this market is Bubble ben bernanke and friends otherwise this market wouldn't be trading where it is today.

    Market Pros: S&P To Blow Past Upper-End Resistance?
    CNBC staff and wire reports | December 02, 2010 | 05:51 PM EST

    After the best two-day stock market gain since July investors were at odds over what comes next for stocks. Some worry that the S&P [ .SPX 1221.53 +15.46 (+1.28%) ] is nearing the upper end of its range and about to slide lower. Others are adament that stocks are off to the races and expect the S&P to crash through resistance and surge higher in the days ahead. How should you position? What’s the trade?

    Instant Insights with the Fast Money traders think the right trade is the hard trade and that’s to hold onto long positions, says Joe Terranova. It’s so easy to take profits and cash out, especially if Friday's jobs report is worse than expected. But I turn the desk’s attention to the Vix [ VIX 19.39 -1.97 (-9.22%) ], which is sharply lower. The Vix got crushed on Thursday; it broke below 20, adds Jon Najarian, that's a big deal. I take it as a sign that investors now believe in the rally. Personally, I don’t think we’ve seen the highs for the year yet.

    The 1220 level - which is where we are on Thursday close is where the S&P has had trouble in the past, reminds Guy Adami.

    However, I have to admit it feels like the S&P wants to blast right past it. On the downside, 1173 is also a key level. The market has tested that level several times and its held. But when it ends I think it ends badly.

    I think we may be at the upper end of a range, adds Steve Grasso. However technicals suggest if the S&P blows past 1228 – the market could go up, up and away.If you believe global systemic risk is under control then this is a good time to buy the market, says Tim Seymour. I think valuations are still very impressive. Stocks are cheap. What do you think? We want to know!

    Chatter on the Street suggsets Goldman Sachs may have moved the market on Thursday after they upgraded the banking sector [ XLF 15.13 +0.3775 (+2.56%) ] to overweight; this is the first time Goldman has been this positive on the sector since 2008.

    "When you get a shop like Goldman out supporting the sector, it can't help but boost investor confidence," says Michael Nix, principal at Greenwood Capital Associates in a Retuers interview.

    Because Goldman is predicting a steeper yield curve, they say long The BKX [ BKX 47.63 +1.78 (+3.88%) ] is their best trade going into 2011, explains host Melissa Lee. Following are some other favorites

    Goldman Sachs' Top Bank PicksJPMorganCitiBank of AmericaPrincipal Financial GroupBlackstone GroupInvescoEvercoreTD AmeritradeStifelState StreetSimon Property GroupDr Horton

    What’s the trade?

    I’m buying calls in JPMorgan [ JPM 39.31 +1.16 (+3.04%) ], Citi [ C 4.42 +0.12 (+2.79%) ], Bank of America [ BAC 11.68 +0.39 (+3.45%) ] and in Goldman [ GS 162.50 +4.05 (+2.56%) ], reveals Jon Najarian. I’m looking for a breakout to the upside.

    I agree with the yield curve argument and I’m long JPMorgan, Citi and Wells Fargo, says Brian Kelly.The news out of Goldman Sachs suggests to me that exchanges are the places to be, says Joe Terranova.

    I think there’s still incredible headline risk in these names, says Guy Adami. I’d take profits and even consider putting shorts out.
  2. Maverick74


    I'll give you 4 things to consider here.

    1) The s&p is still sitting on the 2008 lows when priced in gold. In fact, we made new lows. So technically, the rally hasn't even started yet.

    2) The S&P has not gone anywhere the last 12 years. You keep talking about how far we have come off the bottom but that is disingenuous at best. We have basically been in a big trading range for 12 years and are due for a breakout.

    3) The S&P is dirt cheap compared to bonds. I'm not sure the S&P has ever been cheaper at any point in history compared to bonds and this is a huge driver as to how institutions allocate capital.

    4) Corporations and banks are sitting on record amounts of cash. Never in history has so much cash been sitting idle looking for a home. Where do you think that cash should go? It can't stay in cash as the dollar is being devalued. It can't go into bonds as there are no yields there. At some point it has to find it's way into risk assets and that means acquisitions, stock and private equity.

  3. Interesting. Let's see from the other side

    1) eventual bottom will be DOW= GOLD like we had in 1980s
    2) Nikkei goes nowhere for 25 years. So what? Amazon just reached its Nasdaq highs and it's definetely bubble again
    3) bonds are manipulated. you can't compare stocks to bonds right now. You should compare stocks to gold like you did in 1 and comparing to gold stocks are very expensive
    4) insiders sell astronomical amounts right now. Don't they know about record cash which will lift their stocks?
    Take any Nasdaq stock they spend all their excess cash on share buybacks then give insiders options who sell their shares and buy 5 million houses. So no most of this cash will go to personal consumption which is good for economy overall but hardly a reason for stocks explosion
  4. Maverick74


    1) Maybe, my point was you can't call this a rally when it isn't.

    2) Again, I'm not saying otherwise, simply saying the market has been in a trading range and therefore is not overbought like the poster suggested.

    3) Everything is manipulated. Moot point.

    4) There are a million reasons why people sell, only one reason why they buy. Smart money is buying.

    The rich are not buying real estate right now. In fact the last article I saw said the rich favor renting now. Home ownership is dead. Where do you think the rich are putting their money? It's not real estate, it's not bonds. And not under their mattress.
  5. If fed stops QE market will be under 1000 in no time no matter how cheap it is comparing to bonds, no matter cash on sidelines or anything else

    I won't take any risk with all my money longterm and be totally depend on 12 old men with dementia called the FED

    Rich put money into gold, silver and yes, real estate
    Manhattan condos are stronger than ever
    Dumb rich put money into stock market
  6. Maverick74


    OK rich guy, whatever you say. I'm a trader so that's what I do. I'm not a long term investor. If the market is weak, I'll sell it early and often. And vice versa. I find dogma to be a very debilitating condition for the average trader. Good luck with whatever your doing. Jesus, you act like there is no liquidity to get out of your positions.
  7. Wasn't it only about a month ago that all that money that was on the sidelines is said to have begun to come into the market?