We closed today at the 1007 level on the S&P 500. This was the previous resistance we were watching last week. Are we now testing 1007 as support? It's hard to tell right now. Earnings season is winding down and there aren't too many catalysts I see in the near future that can take us much higher. There is a Fed meeting this week that might move the market one way or the other, but nobody expects any surprises. We're still above the 5 day simple moving average on the S&P 500 (about 1004 on the S&P 500). Until we close below that average, I'm not going to bet against this market. I'm buying each of these pullbacks until I see some real clues that the trend might be reversing. If we close below the 5 day moving average, I will try to go to a larger cash position. If we start to move below the 10 day moving average or the 20 day moving average, I will start to look for put option trades or short positions in the market. I was expecting more buying to take place when we broke above 1007 last Friday. If we can't break above Friday's high (1018) within the next few days, I will doubt the strength of the breakout.
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