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MV Weather Report: Chance of Clouds Ahead for S&P


Rain or shine, we review the day's biggest stock stories.

It was the 6th consecutive week in a row that the S&P 500 ended positive. Looking back it has been a truly remarkable 6 week move, as the S&P has leaped from 666 to today's intraday high of 875. Making this one of the greatest rallies in history. But, the party must end sometime right?

Soon to be Minyanville Professor James Kostohryz, who correctly called the bottom in the market, started taking profits this week in his trading longs. Here is an excerpt from his Buzz today.

"I will not take any long risk into the weekend.

"To the contrary, I will initiate some put positions late today and then again on Monday if I get the opportunity.

"I expect a correction of 10% or more in the SPX in the second half of April, perhaps as early as next week."

I happen to agree with James, I think the pullback is coming and it will most likely happen next week. Most of the S&P 500 will report first quarter earnings next week. So far, earnings have gotten a positive reaction but no company has truly missed or been inline. What happens next week if Apple (AAPL) or Amazon (AMZN) doesn't beat big? What if Bank of America (BAC) misses on Monday?

My point is, we are set up for failure here. It's just a matter of time until Hoofy breaks his ankle and falls off the cliff--being this 6 week run.

Here is a Buzz from Quint Tatro about his current thoughts on the market.

"It's always easier for me to be bullish when the crowd is leaning, thinking and talking like the world is ending. Of course I will always await technical confirmation, which is exactly what I did over the last several weeks. Now however, I am seeing many charts creep into critical resistance points, just about the time the world is clamoring to own stocks.

"Discussions have switched from 'what to short,' to 'what to buy,' and e-mails have gone from 'why are you long here' to 'why are you not longer here?'

"These are the times I will always start to be on the lookout for the proverbial 2x4 that likes to come at your head, just when you start floating in the clouds.

"Yes the technical picture has improved, yes there are trades to be had and yes we've come a long way baby, but also keep in mind that at this very moment, the right here and right now, the tape is being pushed higher by anxiety filled investors feeling they have missed the boat. Allow me to debunk that and put your mind at ease. If the bottom is in, we'll have ample time to trade on the long side. A healthy market does not go straight up, it backs and fills consolidating moves along the way. Look for opportunities that offer prudent risk versus reward, setting your stops and respecting them."

Alright Minyans, I'm off for the weekend.

In memory of our fallen friend and trusted colleague, Bennet Sedacca, 100% of the donations made to the RP Foundation through April will be channeled to philanthropic endeavors consistent with the RP mission, working closely with the Sedacca clan in the distribution of those funds. We thank you kindly for your support as we strive to effect positive change in the lives of children.
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No positions in stocks mentioned.

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