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S&P Reaches Election Day High


Traders having déjà vu as S&P reaches 1005 for first time since November.


As I've barked about like Rainman talking to Judge Wapner of late, 1005 was the last time the S&P 500 closed over 1000. It was also November 4th, the day President Obama was elected. Yesterday the S&P closed at 1,002. If we're going to make a double top type of thing on the S&P 500, now seems a reasonable time for a sell-off to begin.

Does that mean "short it"? Absolutely not. It means if you're not trimming some gains you're playing mumbly peg with prison thugs; your hand is the only one used and others in the block do all the stabbing. You might win, but the smart money is betting on the number of fingers lost before your friends stop. 50% up in 5 months. Today being President Obama's birthday gives the double top idea a hint of poetry. However much of that you caught, take a little off anyway; poetry just doesn't sell in trading pits.

Here's what I'm mulling:

  • I'm sure it wasn't just Minyanville's Woo Woo Kid and I who immediately thought of Goodfellas when we read this story about Lloyd Blankfein telling employees to keep high-profile purchases on the down-low in the wake of the Luftansa job... er... the AIG (AIG) bailout, designed by ex-Goldman Sachs (GS) employees; a deal which GS lead. The solution to the financial crisis (says the theory of the day) was getting Goldman paid back 100 cents on the dollar while others got less than 20%, which would save the system. GS rules the world. I can't think of a shorter, more cogent, argument for owning the stock (which I still should).

  • I'm heading to Canada absurdly early Thursday morning for some fishing and time with my oldest friends. It'll be good to get in touch with my staunchest fan base as well. For both sporting and self-defense reasons, I fish with dynamite and a net. Again, it's about the bonding more than actually fishing. It's also about catching the most fish; you can't imagine how much better dynamite works than traditional (read: Sissy) fishing.

  • Speaking of the tape, explosions and stimulus, my alter-ego and his marker lived long and well off the 950 resistance. One day after that column was written/drawn, we broke through the 950 50-point S&P rally. Since then, absolutely nothing has been able to hold the rally down. At this point the creepy marker charter is in dire straights. He's not fighting the tape but the 50% S&P rally since March 10th has laid waste to the bears and created a market where "buy the dip" rules. Remember, it's not about catching the exact bottom or top, it's about staying on the wire and knowing where you stand. Right now bears are hanging from a slippery wire, 10 more S&P points from simply drawing a net and letting go. Here's where we stand, according to the Purple Marker compared to where we were on July 20:

    Click here to enlarge

    The Obama election highs were the bears' last, best hope for a turn back from this rally. The S&P went over the 1005 November 4 highs then retreated... barely. The S&P ("the real market") is still over 1000 and is flirting with breaking the Obama election highs the way Bill Clinton once "flirted with interns"; violation seems inevitable. Bizzaro Harold is hanging in there for now but a close over 1,010 means it's time to let go of the "top" idea and draw himself a net:

    Click here to enlarge

  • On the long side, the USO Oil ETF looks to have room to 40 and perhaps beyond. Dancing like a Shaman in front of an eternally burning barrel of crude seems a small price to pay in order offset the USO – destructive impact of the laughably expensive "Cash for Worthless Cars" program and generate the income to pay for it.

    Click here to enlarge

  • Today's "Stop whining and figure out how to trade it" chart is brought to you by Bank of America (BAC) (the reading program for dyslexic children). Since breaking over $10 in May, BAC has been money in the bank for this American; simply by buying any time it had a $10 handle and selling at or within a dollar of $15. As shared with you yesterday, I dumped BAC over $15 and was delighted with the move for less than 18 hours. BAC is now pushing $16 and I own not a share. The last spike over these levels took the stock to the mid $17 area, at which point I just may be found with a purple marker jammed deep in my eye.

  • This just in, S&P 500 closed at 1005, dead on the election day highs. Déjà vu all over again? Maybe, but regardless it gives bulls and bears decent set ups with tight stops. As for me, I'm playing it tight and packing for Canada.
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No positions in stocks mentioned.

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