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Bulls Tackle Dow 12,000, New Trade Recommendation

Jan. 26, 2011 1:08 PM ETSPY, QQQ
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12:50pm (EST)

Write it and they will come...

In our "Field of Dreams", we had a vision of Dow 12,000; S&P 1,300; and Nasdaq 3,000 back in October 2010.  We have written and talked about these targets for the last 3 months and today was opening day. We felt it when we woke up this morning. For those of you who believed in us, welcome to the party.

Seriously, how many "pros" have called for a pullback or correction over the past few weeks or months?  How many said the “Santa Claus” rally was over before it started? How many got nervous when the high-beta names started falling?

Too many for us to count, obviously.  Perhaps they got scared last week when the Nasdaq was tanking or the S&P was threatening to fall below support.  Little did they know, this was the "testing" period and a lot of the professional money managers failed to make the grades and got it wrong.

In fact, we said the market would "pullback" last week before the it would set new highs again. We went out a limb and stuck to our guns last week when the “pros” told you the market was going to correct or pullback.  Heck, we even said last week was going to be a down week because of options expiration and we took profits on a number of trades and left the stronger ones open.  However, we also OPENED three new bullish trades last Friday as we knew the bulls had more gas left in the tank.  The knuckleheads who told you to get out are the same ones buying this morning.

From our Weekly Wrap October 31, 2010:

The S&P 500 fell less than a point and settled at 1,183.  The index hit a high of 1,196 but was unable to crack our 1,200 target as it gained less than a point and went nowhere for the week.  However, for October, the S&P popped 42 points, or 3.7%, and a run to 1,300 is in the cards if the bulls can break resistance while support remains in the 1,170-1,175 area with additional backup at 1,150.  YTD, the index is up 6.1%.

The Nasdaq was the one index we did confirmation on for another leg up although Friday’s session was flat.  Tech closed above our 2,500 target and the index is at 2,507 after clearing this hurdle last Wednesday.  For the week, the Nasdaq added 28 points, or 1.1%, and for the month it gained nearly 140 points, or 5.9%.  We have our sights set on 2,600-2,700 over the near-term and support is at 2,450, but, the monthly close above 2,500 for the first time since May 2008 was big for the bulls.  The Naz is up 10.5% for 2010. (END)

Folks, we aren’t there, just yet, because we are still waiting for the S&P 500 to trip 1,300 target and the Nasdaq may or may not run up to 3,000. Our point is that you use targets to set up your trading strategies for weeks and months.  The market isn’t always going to be an easy read but sometimes it is.

Sometimes you will have trading ranges or flat markets (like the 5 month range we had in 2010) and sometimes you will have straight up and straight down markets, or trends. After flat markets, there is usually a breakout or breakdown and we told you to watch for it. In trending markets, options are easier to trade. In choppy and flat markets, your goal is to stay even. Of course, the market has been trending higher since the breakout so we have been aggressive with our trades.

We still need to be careful because the market and news is always changing but back in December, we said the bulls could run until April.

As we head to press, the Dow is up 11 points to 11,988 and has traded to a high of 12,020. The S&P 500 is higher by 6 points to 1,297 and has kissed 1,299.22. We would love to see a close over 1,300 by the final bell. The Nasdaq is showing an advance of 19 points and is at 2,738.

We have a NEW TRADE today so let’s get to it. Subscribers, check the Members Area for the details and for the other trade updates.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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