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MV Weather Report: Clouds Roll In Late on the S&P


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


It's great to be back in the hot and sticky Big Apple. What did I miss? Seems like nothing as the quick two day pullback last week was met with buyers and a new high -- which seems to be the trend around here.

For today, the S&P 500 shot up to a new year-to-date high of 1035 before selling off on almost no news. The index closed down -0.05% to 1025. The most likely reason for today's roller coaster session was an options expiration hangover.

I noticed that rally leaders like Apple (AAPL), Research in Motion (RIMM), Bank of America (BAC), Wells Fargo (WFC), and JPMorgan (JPM) traded strong for most of the morning before reversing with the board market.

Today on the Buzz and Banter Professor Smita Sadana gave her thoughts on when to short the market and what sectors to look for divergence in.

"Last week, I shared several thoughts on why I am not shorting the market indexes yet; in my world, new highs are usually not a basis of short-selling, unless accompanied by a blow-off situation or followed by a serious blow (like LTCM debacle) to make such highs vulnerable to a sudden decline.

"In all my personal endeavors, I usually plan for the 'worst-case scenario' – with the assumption that once the worst-case scenario is accounted for, all other scenarios- in-between can be managed. The same thought permeates my trading. If I am uncomfortable holding longs given the bleak fundamentals or a marked rise in the indexes, I usually trim positions, but do not go short strength, unless there is a reason to do so.

"We'd also need to be on the lookout for divergences in the key sectors supporting this ascend, such as technology, semis and financials.

"The bearish patterns that I shared in that note are still intact – But as I said then, they are consummated only at the break of 950 on the SP-500.

"And for that, the SP-500's previous high (1012.73) and the now the closest support level, needs to be broken."

Smita brings up some very excellent points. Bears are getting killed as every little pullback has been met with new buyers. However, tomorrow will be another day and traders will be watching for the S&P/Case Shiller home price index at 9:00 (cons. -16.40) and then the consumer confidence number at 10:00 (48.0).

For those that tweet, follower the Minyanville twitter, updated daily by Buzz and Banter Editor Terry Woo and myself. That's all for tonight, have a good one!

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Position in BAC

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