Morning Thoughts January 9

This morning it's all about timeframes…and that's what we do!

Friday's trading session was rather flat and uneventful, which was to be expected after busting out of the gates the way we did on Tuesday when they opened the markets for 2012.  The 'easy' trade to the upside is likely over, although we still expect 1290-1300 to be reachable in the S&P 500 before we get a little pullback that may again be buyable with profit targets up into the mid 1300s.

On Friday Treasuries rebounded following comments from a Federal Reserve official that more monetary policy would be well advised. Crude futures and gold both finished lower and the euro hit a notable 16-month low vs the dollar amid renewed recession fears. We remain long the EUR/USD cross rate via a long position in the FXE.

Immediate term please see the 15 minue chart of the S&P 500 futures and ntoe if we break the red line to the upside we have room up to 1282, which is about 1287 or so on the S&P 500.

Beyond that however we are overbought and are looking for a little relief in prices to the downside anytime later today or maybe tomorrow.

On a longer-term time horizon of anywhere from a few weeks to three months the daily chart still leaves us with a potential upside target to somewhere between 1340 – 1360.

Also note the last three days in the S&P 500 were fairly unchanged.

Meanwhile small cap stocks continue to underperform…pull up a chart of the Russell 2000.  They must get going for this market to rise over coming weeks.



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