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MV Traffic Report: Market at the Crossroads


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

What a week. The DJIA soared passed 9000; the S&P broke out of the 955 level.

Some earnings reports were great: Apple (AAPL), Baidu (BIDU), Caterpillar (CAT); others were met with selling pressure: Microsoft (MSFT), Amazon (AMZN), and Deckers (DECK).

For the day, the S&P 500 meandered, which is typical following a huge up day. The widely followed index traded in a tight range all day, finally closing up 0.30%to 979.

After the last 2 weeks, many investors are now scratching their heads: do they buy the breakout or wait for the much anticipated pullback?

On today's Buzz and Banter, Professor Branden Rife gave his thoughts:

"Many of the funds I cover are asking 'Whatcha think here?' I wish I had more insight to offer, but at the moment, the tape is in a precarious position. Everyone is expecting a pullback, but no one is really positioning for it. Think about that for a minute.

"That being said, the desire to buy the first dip is standard protocol by those who have either missed a big McRipper rally, or who feel they didn't buy enough and the train conductor generously slowed the train before it completely left the station.

"If the tape fails to make a higher high after pivoting up from the first leg of a move down, the hot momentum money usually pulls the eject lever and leaves the overly eager buyers holding the bag. That's about when passengers start cursing at the conductor and themselves for buying the ticket; neither of which have happened yet."

Rife makes some excellent points, and I believe he did an excellent job of capturing the current sentiment of this market: What do I do know?

Today, Professor James Kostohryz took profits on the solar longs he initiated back in May. Here's what he plans to do now:

"The reason I am selling into this ramp is that today provides a potentially unique opportunity to take advantage of a rare divergence. If I am correct about the market nearing an intermediate term top, these mega-beta names will probably get hammered severely – similar to the way they were a few weeks ago when the market plunged to S&P 870. This will provide a much better entry point relative to current levels.

"In addition to having reduced the above longs, as per my earlier buzz today, I have sold short into the 975 level, thus, increasing my net short position. I will short all the way up to 980 (if necessary) before stopping out in the low 980s. Target: A bumpy ride down to 900 and perhaps below."

What a week -- I'm beat. Check out the trading radar for a preview of next week.

Have a great weekend!
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No positions in stocks mentioned.

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