After the run-up in
today's equity markets, helped in large measure by Fed Chairman Bernanke's morning comments, I'm raising my conditional trade stop-loss floor to
1400 on the S&P 500. Last week I had a 1380-1385 target floor in mind (see
blog of March 22nd). However, today's market exuberance together with my expectation
that favorable US economic data will be forthcoming over the next several days
suggests to me that we could see a higher market before the week is out ---
perhaps 1425 on the S&P 500. Moreover, I think institutional "window
dressing" for the end of the quarter will support market prices for the
remainder of this week --- although it's possible some of that "window
dressing" added to today's market results.
If the market falls below
1400 in the next couple of weeks, I think it probably will be because the
economic data disappointed, the market re-thinks its enthusiasm over Bernanke's comments, and/or we're heading for that proverbial 3-5%
correction --- and setting conditional stop-loss triggers at the 1400 level
will protect much of the as-of-yet unrealized gains in our managed portfolios.
