S&P 500 Higher Prices Ahead – Not Looking To Short This Market

by OLIVIER on MARCH 8, 2010

Pretty uneventful day. So I am simply going to write a bit about the kind of message I think the market is sending. I still see way too many bears fighting the tape and rationalizing their short positions. The market is proving them wrong. Put another way: ‘This market is on a mission’. Bears will have a hard time. My best guess would be for some serious short squeezes ahead, forcing bears to finally throw in the towel. That would coincide with a price target for the S&P 500 in the 1200 – 1300 range. As I’ve stated a while back, I do think this bull market is maturing and one has to be very selective as probably much fewer stocks will be able to lead the markets higher. That means the best stocks and new leaders will still be able to move significantly higher even though the market as a whole might only move sideways or correct in a very orderly fashion. In a nutshell – as long as we don’t see huge technical damage in the S&P 500 I am not looking to short this market. I think the best results will come from aggressive small cap stocks trading near their 52 week high or their all time highs. Overall the majority of the charts I look at and come across my scanning look bullish.

Up-to-date S&P 500 chart on my public list.

On to the markets and a few select stocks:

• Japan: This is probably the most hated market in the world. The market didn’t go anywhere for 25 years. Except for going down that is. The stocks, especially the small caps are moving up though. Something to keep on eye on. Especially JOF – Japan Small Cap ETF.
• KLIC – Kulicke And Soffa: Setting up nicely. Offering a tradable semiconductor stock set-up with decent pattern pressure.
• FPX.V – First Point Minerals: Incredibly strong Nickel stock. Didn’t offer a sound entry point though. I’d rather miss an opportunity instead of chasing stocks and not being able to define a sound stop loss and exit point. There’s never a shortage of opportunities in the markets.
• SPU – SkyPeople Fruit Juice: Extremely low float. This is an extremely bullish situation. If we see another 1 million shares traded in one day there literally won’t be enough shares to buy.
• YUII – Yuhe International: The stock is setting up for a break out to the upside. Patience.
• MRZ.V – Mirasol Resources: Silver goes up MRZ.V goes down. Silver goes down MRZ.V goes up. Go figure. In any case this one is behaving very well. I see much higher prices ahead if the stock can manage to close above 2.70.
• Platinum: Check the Platinum Sector Overview Chart. Most are looking bullish. The stocks need a bit more time to set up though. SWC is a high priced and highly liquid US listed stock that is easy to trade. ELR.TO Eastern Platinum and ANO / ARQ.TO Anooraq Resources would be alternatives for those who prefer Canadian stocks.
• GMO – General Moly: Patience.

I will probably add back more China stocks to my public list soon. These are the ones I think will make it:

• CAST – ChinaCast Education
• CGA – China Green Agriculture
• SEED – Origin Agritech
• HEAT – Smartheat

The biggest secret about success is that there isn’t any big secret about it, or if there is, then it’s a secret from me, too. The idea of searching for some secret for trading success misses the point.
– Ed Seykota

Have a great evening!