Excellent Inflection Point

Things are moving quickly and I will dispense with the platitudes. We have an excellent opportunity as we are sitting on a juicy inflection point right now and right here. This is where we strike:

The 100-day SMA has thus far held up – I cannot guarantee that it will but we frankly don’t care as the risk down here is minimal as this is the bull’s line in the sand. I’m long with a stop below the SMA – which means a stop below 1760. If it drops below that I am set up for a flip with a generous stop above the SMA. Have at it but don’t get over exposed like one of the commenters I just stomped on. Silly bugger… please don’t follow his example and never risk more than 1% of your assets on one position (or several correlated ones).

As you have probably heard by now the FOMC has decided to taper by $10 Billion per month which brings us from $75 Billion to $65 Billion. I have no idea how the market will digest this and although the response thus far has been muted there is no telling which way the pendulum will swing. I think the setup above represents the best odds in light of a major inflection point.

UPDATE 2:18pm EST: The spoos are following the YM lower. If we breach 1760 I will flip for a short position with a stop above. I may have to flip back/forth a few times but I think the final rewards will justify the hassle.

UPDATE 2:29pm EST: So far so good – we got as close as 1664 on the spoos but my longs remain intact. Will wait and see – nothing to do right now.

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Cheers,