2,800 Tuesday And The S&P – Are We There Yet?

66.6 Thousand. 

That's the volume the S&P's (SPY) ETF hasn't broken since June. Yet the S&P, on no volume at all, has gained 100 points (3.7%) in the first 10 days of July and is now just another 100 points away from the all-time high, after matching January's high at 2,872, of course. Things looked fantastick then – the S&P was on a run from 2,550 so up 322 points was 12.6% and, on the morning of Jan 18th, I noted the following in our report:

Up and up the markets go but we see shorting opportunities this morning IF we cross back below Dow (/YM) 26,100, S&P (/ES) 2,800, Nasdaq(/NQ) 6,810 and Russell(/TF) 1,585.  The rule of thumb for shorting the futures is wait for 2 to cross below and then pick the next one that crosses and keep very tight stops back above the line and if ANY of the indexes go back above their line – kill the trade and wait for the next set-up.

The Dow is much lower now, at 24,850 (-4.7%) but the Nasdaq is way up at 7,320 (+7.4%) and the Russell is at 1,711 (+7.9%) and we're short both of those indexes on the assumption the Dow and the S&P are not crazy (and the much broader NYSE is down at 12,776 from 13,637 so that's 861 points or -6.3%). Of course, right after I wrote that note, the market dropped 10% into early February and boy were we glad to have been cautious then!

It was Tuesday, Jan 23rd, when Trump first declared his Trade War and now we're actually starting to fight it and the level of complacency is amazing but we were just a complacent on Jan 23rd, when the markets were blasting along to new highs – as if there wasn't a care in the World – until there was.

The Dollar hit a 3-year low on Jan 24th and fell below the 89 line to 88.50 before recovering back to 90.5 and, eventually, all the way to 95 so the same market levels look over 5% more expensive now to people buying it in foreign currencies.  This is what our Big Chart looked like on the morning of Jan 23rd – very impressive stuff, right?

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Disclosure: Our teaching theme at Phil's Stock World is "Be the House, NOT the Gambler." Please see " more

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