$SPY Read for the Day, March 30, 2011

“We continue your regularly scheduled BULL MARKET..we apologize for the interruption”

My oh my, We are walking into a HUGE gap-up today. The ES hit as high as 1324.50 for a cool +8. <–Ka-Pow!

Coming into the week I wanted to see some digestion for the run to 1338 by Fryday, so far so good. Monday and Tuesday we saw the needed digestion, and a lot of constructive activity under the surface. Now when we see 1338 I will re asses the situation. At this point I just cant see us blowing through it like it was not there. It is the single biggest area of resistance on the SPX. But that is still about 10 points or so overhead. One day at a time. When we do break it, strap in, we will rocket higher. Depending on how we get there.

The NYMO is a very important tool in my box, and it is at +25.34 coming into today, we are no where near overbought. The way we have recovered 70+ points off the 1249 lows has been very constructive, we have paused when we needed to and lifted when we needed to.

This recent run has been a blast to trade, after finally correcting 7%. My own trading has been a fun ride, just ripping points out of all kinds of stocks. But do not forget where we are. We are just under that brick wall of 1338. This is a “toppy” area. I love trading after dips/corrections. This one is not done by any means. Just keep heavy cash. I haven’t deployed more than 50% of my account in several month’s. Call it what ya want. I call it disciplined trading. You don’t have to try and be a rock-star every day or month for that matter.

Copper is a MAJOR market tell. I watch it like a hawk. We have lost the all important 436 level on a closing basis. Copper usually leads the overall market by 2-3 days. It is recovering though, It has tagged 438 in the overnight session. I think copper just took a break. It is ready to run again.

The SPY has hit as high as 132.86 this morning, a full one point higher than the close yesterday, and by breaking 132.75 we are pushing into the “Vacuum”, take a look at my SPY Weekly chart. Since the cup was put in back in the summer, the measured move was 135-140. We saw a high of 134.11. Plenty of room to go people.

To dial it in for the day I use my SPY 60 minute chart. First support under us is the gap fill at 131.86 and then my MAJOR support of 131.42. That should hold today. Worst case scenario is the 50% fib at 130.53. Cant see that even getting close today. Upside target is the gap which starts at 133.04 and fills at 133.95. Then we have 52 week highs at 134.11.

Important to note that no matter where we are or what the market is doing, you have to be careful to not chase on gap up’s like this and ALWAYS sell some into it. You don’t see a hungry rat in a cheese shop do you?
Baa!

Swings L: $ANF 56.35 $ATPG 9.90/11.17 $FSLR 155.98 $JBHT 43.58 $OXY 101.14 $SSO 51.90 $X 55.15 $ISRG May 350 calls 10.60 $GS 160 weekly calls @ 1.17