There are many bears who have missed out of this rally or so called bounce due to their total bearish views of the market.
So far SPX have rallied close to 112 points from the bottom.
On Wednesday we have two key events happening:
1. FOMC meeting
2. Crude Oil Inventories report
For the FOMC meeting, I will watch to see how the market reacts when Bernanke talks about inflation. If the market thinks there will be more inflation ahead of us, then the key trades are
XOM, OIH
For the Crude Oil Inventories, expect a rally for XOM, OIH if inventories numbers are lower than expected. If you so decide to go short if inventory numbers are higher than expected, get out before the end of the day.
As for the Financials, watch the Bonds...if Bonds go lower then it is good for stocks...I expect GS to pullback a little in the morning only to squeeze the shorts later in the day.
Friday is options expiration day, so any pull back from now to then should be viewed as having some potential to turn out as a shorts squeeze.
On the technical side, SPY is close to touching the top of the bollinger band, I suspect the market could still go up until Friday. Otherwise, the market will find ways of going sideways. The RSI reading is currently overbought...though bullish momentum can still push the reading further. If things do make a turn by Monday, this will be a great short opportunity.
My watchlist:
GS, POT, XOM, OIH, IWM
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