Morning Thoughts January 11

  • 5mo high – SPX held 1,290 –  Great action on improved volume – beat 5day average by 7% (10day by 30%)

  • SPX 1,300 now a short-term target (also a retracement level technically)

  • Dow momentarily traded above 12,500 early in day, but failed to hold. Some profit-taking late day as VWAP was hard to hold on SPX (don’t blame Inst selling after recent run).

  • Net net another win for bulls. Small short-covering on this move (mostly in Industrials), but real buying evident.

  • Banks on a tear – BAC up almost 6% and GS near par ($100) where it may meet some resistance

  • Overall the equity market is a little overbought here and we expect some consolidation.  1260-1280 should hold as support if they want to get above 1300 on the S&P 500 in coming weeks

Below please find a few charts to note:

Transports are breaking out…also see our Bucket 2 long position in FDX

Financials also looking much better…

The BKX bank index is at a key area of resistance

The hourly chart of Goldman Sachs (GS) shows it overcame resistance since late October.  The stock is also near the $100 mark where it may encounter resistance and has a good gap below it.  We will watch it closely for clues to the broader market

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