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What a wild week for the indexes last week. On Monday SPY rested slightly under the 50 day, then Tuesday $SPY collapsed from the 50 day and found support at the 100 day. Wednesday SPY went over the edge as the fear of a stalemate in Washington D.C. reached its zenith, but the SPY was able to stage a comeback and finish above the 100 day creating a reversal candle that I was not at the time impressed with. Then suddenly the clouds parted the angels sang and the bulls stampeded back into stocks Thursday morning causing a gap up to the 50 day then a surge over the 10 day and the second best day of the year for returns in the stock market. Friday followed up with another up surge getting the SPY a little extended and due for some consolidation to let the 10 day catch up.

  1. The past two trading days has seen amazing strength and momentum forcing me to take long positions.

  2. The market appears to pricing in a deal being struck in Washington D.C.

  3. If the market can rally like this during the debt ceiling and Obamacare funding debate what will it do with any good news?

  4. The odds of politicians taking the U.S. over the fiscal cliff is very miniscule.

  5. SPY is a little over extended and would benefit from some price consolidation here to let the 10 day catch up.

  6. High probability of SPY returning to all time highs this month.

  7. Plenty of room to run with the RSI at 57.37, this whole year 70 has been the accurate signal of overbought for SPY.

  8. The 50 day and 10 day were both broken triggering my buy signals.

  9. Thursday’s SPY volume on the gap and go was twice what it was on many of the down days for those wanting to see volume.

  10. IWM with in striking distance of all time highs, QQQ close to 13 year highs.

I was short into the plunge Tuesday but was stopped out of my short on Thursday and I went long. I am currently holding a smaller than usual position in $SPY for my trend trading account and a position in $UPRO in my more aggressive trading account. My stop is a same day end of day close below the 10 day sma.

SPYCHart