Are You In The Game?

---

The market is breaking all kinds of long standing records - new heights, biggest moves for the month of January, equity fund cash inflows, and more. So is now the time to jump into this market?

Why did stocks rally? Friday's employment data was not outright better than expected. In fact, the bond market's initial reaction was typical of bad economic numbers. But stocks reacted overwhelmingly bullish, and bonds quickly changed their initial "weak economy = lower yields" stance into a one of the biggest intra-day change of direction days we've seen in months!

This market is not complicated right now. It's going up. Don't fight it, trade it. There will most likely be a pull back into the January range, but as a trader you don't need to wait for a correction. You can simply focus on good low risk entries and letting your profits run right now. The game right now is in selective bullish breakouts and buying dips. I'd expect a trading dip in the coming week, but this should not keep you sidelined until it happens.

Subscribers, "Subs", you should know the short-term rules for keeping your risk tight so that when the market rolls over you're not going to get hurt. Review them, and enjoy the markets momentum right now.

If you're not a premium subscriber, make sure you know how to control your risk - there is plenty of it up here, but the trading opportunities make it well worth being in the game.

S&P 500 (SPY) The melt up continues after a 2 day pause. If it pulls back look for support at 151 and 150.60 because of the pivot levels and the market's prior respect for these levels.

Russell 2000 (IWM) This is has been and will continue to be the intra-day indicator to watch for determining the day's trend. Subs: Pivots Positive. The S1, 89.90, level lines up as key level.

Dow (DIA) The media is focused on 14,000 Dow, but I only care that it follows the rest of the indexes right now.

NASDAQ 100 (QQQ) Hard to trust, and it requires that you keep an eye on AAPL, but there is big breakout potential here. 67.80 is the big level then look for resistance at 68.30. For support, look for 67.50-.35

GLD Trapped between the 200 and 50 DMA. I think that if you want to trade this right now on the long side you should consider SLV instead - the chart is cleaner. Either way, I'd wait for a break of the last three day range for a momentum trade.

SLV (Silver) Friday's range defines the tipping point of a multi-day wedge. Therefore a break of this range could lead to a nice directional move. I'll only trade the long side move and 31.22 and 31.41 are key levels to break with a target of 32.40.

XLF (Financials) Nice big breakout confirms the health of the overall market's rally. I don't want it to pull back, but I don't think it's worth chasing up here either.

IBB (Biotechnology) Nice breakout of a big consolidation. It has weekly highs to contend with but this is one to watch for a big move higher if Friday's momentum continues. 148.50 is key resistance. Support at 147.40 and 146.80.

SMH (Semiconductors): Nice breakout over a very key level of 34.69. Like XLF, I think waiting for a pull back is prudent 34.70-.60 would be my first level of support to consider.

XRT (Retail) I'm not buying it (no pun intended). The very tight range last week had very big volume and no movement higher. Friday, the market moved up and this broke out and stalled. All things considered, I'll wait and see on this one.

IYT (Transportation) One of the best groups this year. May need a little more digestion time before a new leg up.

IYR (Real Estate) Nice pull back, traded well on Fri. Look for support at Friday's low, 67.40 and potential for a move back to the highs if it clears Friday's high of 67.85.

USO (US Oil Fund) Nice recovery from gap lower. Up trend is intact, but trading intra-day reversals is probably the best strategy for low risk entries.

OIH (Oil Services) Look at the weekly chart. Draw the wedge resistance line from the 2/24 high (let it also extend back to the week of 8/19/2012. It may be a rough ride up but there's big potential here. Subs: The 43.80 area is daily support and FTP. This area will be pivotal and worth probing for long entries if intra-day action agrees.

XLE (Energy) Short-term is a little unclear, but long-term looks very similar if not better than OIH. Subs: watch this and OIH together.

TBT (Ultrashort Lehman 20+ Year Treasuries) Entered on the lower open on Friday. Massive reversal to the upside supports what we've been saying for months - trade this on the long side! If you're not already in, look for a pull back.

XOP (Oil and Gas Exploration) Look at the weekly resistance line from April 2011. Key level to break now is 59.80 Subs: Watch the 10 DMA now to hold, but action is getting choppy.

XHB (Homebuilders) Why pause here? Look at the July 2006 lows.

For more detailed analysis join me, along with hundreds of other subscribers, at Mish's Market Minute and get my daily trade picks, trade alerts, training videos, and exclusive analysis tools. Sign up for Mish's Market Minute now and get a free 2 week trial!