Morning Call: Futures Climb After ECB Refinancing Operation
Round two of cheap money from the ECB took place with high demand, and futures are slightly higher as a result. The take up was around 529.5 Euros, a bit more than expected. Some this say this is a sign of weakness, but I think these banks are just taking cheap money for 3 years to give them some extra insurance. (wouldn’t you?). Back in December I pointed to the first round and talked about its importance as The European QE.
Anyway, markets all closed above the big psychological barriers yesterday and now it’s important to see if we build a new floor above them. Each time we’ve stair stepped into new higher zones we seem to turn the previous resistance into a new floor. If the trend continues, stay with the long side. Let’s see if we can do some work above the 1368-1370 S&P area. The 10day is 1360.
As we go higher, it does make it harder to stay with the rally, and it almost seems like for two weeks, the sexy thing to do is to call for correction. But this has not been the profitable approach. You don’t have to be heavy long up here, but there is no reason to be bitter and fight it. Until we get a clear close below the 10day moving average with some conviction—there is no reason to fight this trend.
At this point Know your time frame and Know you risk tolerance. Markets can trade down to the 50day moving average and still hold the Macro uptrend that started back on October 4th. Just figure out how you can manage your positions and approach (50day on the S&P is 1307).
It’s amazing how many Bears there are out there. I did a segment on CNBC yesterday giving some technical advice on how to stay with this rally in the short term, and where we can be three years from now. Based on some of the responses I received, there have been a lot of guys unsuccessfully trying to short this rally. If you had to pick where we would be 3 years from now, up 300 handles from here or down 300 handles. Which would you choose? The answer is obvious to me. There will be a ton of trades along the way if you that’s what you do. Everyone should tweak their portfolios at inflection points.
In stock specific news, First Solar (NASDAQ:FSLR) is down 7% this morning after missing EPS numbers and cutting sales forecasts for 2012. The solar sector had staged a brief rally in December-January, but it looks like the overall trend continues to be down in this sector with a murky future.
Here is yesterday’s appearance from Street Signs with Mandy Drury.
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