Overview Friday 24 July...

It sure looked like the bears were going to be able to get something going, as we had the most significant weakness we've seen in the past couple weeks. However, the bulls had other plans, as they pounced on the weakness to drive the market up into the close. The upside momentum has been extremely powerful and is unlike anything I've ever seen. Momentum this strong does not reverse quickly or easily, though the recent buying feels like panic buying. This is not a market to try to short until it actually tops out. This is a tough market. Either you have to be willing to chase stocks higher and higher or you have to be patient. I'm opting for the latter.

Short-term bias: bearish (I'm still maintaining this as bearish, if only because I'm not chasing)

Intermediate-term bias: bearish (I still think this correction will take us lower, perhaps to 800 on the $SPX and I don't think we're ready to power higher quite yet)

Long-term bias: bullish (I believe we put in meaningful, long-term bottoms in March, and would use the aforementioned correction to increase long exposure)

Pick updates:

Not a lot has changed from Thursday's look, to be honest.

PALM found support right where we thought it would and had a very nice bounce on Friday. I still think it's buyable around present levels and I actually like the fact that the momentum traders didn't run this one way higher.

DFS, of course, keeps going higher. A loss is a loss, but I think this one was actually helpful for me because it kept me from getting more short exposure as the market rallied. It's still unfathomable to me how this thing could rally 33% in two weeks and form some new highs. Though powerful, the rally is still less than convincing to me, and I believe I will get a better price to escape.

F is in a pretty good spot to start accumulating, though I haven't begun to buy it yet. I would be using Thursday's lows around $6.60 as my stop. This is one to be patient with as it consolidates. SBUX has a similar setup, but has not pulled back like F has. What will be a big yellow flag for the sustainability of the bulls is if we see stocks like F and SBUX fail to hold these breakouts.



Postions: long DFS August $12.50 puts, PALM November $12.50 calls, and $SPX index fund in 401k