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MV Weather Report: Wind Is Right for a Pullback


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

I say this every Tuesday, but that's because it's true: Turnaround Tuesday struck again. Today's battle went to the bears, but the bulls still managed to keep most of the gain from yesterday's session.

The market had a hung-over feeling today - like a typical Monday after options expiration. Notable winners today were Baidu (BIDU), Morgan Stanley (MS), Potash (POT), and Mastercard (MA), to name a few.

A lot of pundits are saying the market has come too far, too fast. I've been saying this for well over a week (Read: I've been wrong). But I still think the market is due for a nice pullback, and I'll be looking to initiate short positions.

Here's what Jeff Cooper said on today's Buzz and Banter.

"The S&P marginally exceeded yesterday's high and is pulling back to the level of an ORB or opening range breakout on the day. If that level 818 holds then the index is on track to extend to 830 which as offered yesterday is 540 degrees up from the 667 low.

"This is a key level being 6 squares of 90 degrees or a true square out (there are 6 sides of a cube or true square). In my study of the S&P going back to its inception I noticed that many completion moves (even if they are only first legs), either up or down, run 540 degrees.

"Be that as it may, even if the S&P should tag 830 quickly from this point it doesn't necessarily invite a short or mean that the index has hit a brick wall. As W. D. Gann said, 'look for time on the side' for distribution to set in prior to a bona fide reversal if that is how things will play out."

The S&P 500 closed today's trading at 806. Slightly off from Cooper's levels. One interesting thing: Professor Kevin Depew is also picking up sell signals in his TD work, but he was able to find some buy singals. Here's an excerpt from his buzz today:

"Looking at some long-term charts today, I was surprised to find that not only was the Hang Seng Index looking far more bullish than US and European markets, but emerging markets and India too.

"Take a look at the iShares Emerging Markets ETF (EEM). Last week a bullish price flip confirmed the buy signal from the week of Feb. 20. Also, the monthly chart has perfected a buy setup.

"The India Fund (IFN) has also this week seen a bullish price flip to confirm the buy signal from March 6."

It's interesting that the emerging markets are starting to turn - will they eventually lead the world out of the recession? And don't they say the stock market is a forward-looking mechanism by about 6 months?

While this won't happen tomorrow, or in the next few weeks, it's definitely something to keep on your radar.

I'm curious to see if the buyers come back tomorrow. The bears had a hard time keeping the bulls down for multiple days. As for the radar: Durable Goods is out at 8:30 a.m., and New Home Sales is out at 10 a.m.

Have a great night Minyans!
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No positions in stocks mentioned.

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