By Gareth Soloway on March 25th, 2010 4:47pm Eastern Time
The markets gapped higher today, surging like the usual fluffy, happy market we have seen since the February 5th, 2010 bottom. Volume was extremely light but a Master Level was lurking according to my hardcore calculations. Over the last two weeks, I had been trying to figure out why, when and how the market was going to reverse after such insanely continuous gains. Day after day this market has inched higher.
After countless hours of analysis, number crunching and hard work, I found a Master Level on the SPDR S&P 500 ETF (NYSE:SPY) at $118.15. For those of you that are Research Center subscribers, you know this level well, as I have mentioned it for over a week now. Sure enough, the SPY ran right into this level mid day. No sooner did we cross it by $.02 to $118.17, then the markets started to reverse. The reversal was strong, quick and brutal for any traders or investors who were long. Luckily, key trades were given out on the short side and nailed beautifully.
United States Steel Corporation (NYSE:X) was given as a short play over $65.00. Today it hit a high of $65.44 before reversing to close at $62.37. What a drop, what a profit! U.S. Steel remains on my list of the Top 10 most bloated stocks at current levels. In addition, we saw JPMorgan Chase & Co. (NYSE:JPM) slam through a double top at $45.20. Once crossed, this became a beautiful shorting opportunity. JPM reversed by the end of the day to close at $44.94, after hitting a high of $46.05. These are just a few of the key trades today.
The markets initially rallied on solid news. Germany said it will help bail out Greece in a worst case scenario, Jobless Claims were solid, Best Buy Co., Inc. (NYSE:BBY) had great earnings and QUALCOMM, Inc. (NASDAQ:QCOM) raised guidance. All this positive news saw the DOW jump higher by over 120 points around noon. That did not last long. When all was said and done, the markets closed flat to lower, a monstrous reversal in place.
The crazy thing about the action today in the markets is simply the reversal on good news. A reversal on good news can often be a key signal for a larger reversal trend. While this may be the case, the InTheMoneyStocks overall reversal confirmation signal did not confirm today. Therefore, we must wait until tomorrow for more market data. We will enjoy our current positions and the profits from today.
Even more insane today were the amount of amateurs who went bullish after being bearish. It is just like the institutions to take the amateurs money and then reverse the markets in the direction they had wanted. Learn the game, it will save you.
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Gareth Soloway
Chief Market Strategist
InTheMoneyStocks.com
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