MONDAY OUTLOOK

We should be nearing the end of the rally. We could move up a bit further, but I wouldn't try to trade that move. Although I think the markets will eventually make another big move down, I think the shorter term movement of the market could be choppy or sideways. This will be fine as long as we keep moving sideways within this big range that we've been in over the last few months. The tighter choppy moves are harder to make money on...unless you use some of the option spreads. Tech stocks have been under performing in the market over the last few sessions. We could see a scenario where the Nasdaq starts to drop more dramatically than the S&P 500 or the Dow. Keep an eye on the Dow Transportation Index and the VIX. If we see the transports drop faster than the market and the VIX start spiking up, we could have another decent drop in the market. Keep an eye on 1250 and 1258 on the S&P 500. These are the next big resistance levels. The financial stocks look like they are completing their corrective rallies. This could set up for a nice trade on FAZ this week. I'd like to see how the financial stocks trade tomorrow before I make another recommendation on FAZ. I got burned a bit from it last week.