The market has had an impressive run in the past five trading sessions. Just over a week ago the S&P bottomed out at 1074. We are now trading at 1193. This run would seem to be unsustainable, and many traders are banking that we will see a pullback. But if traders are looking to short off of these higher levels, I think a tight stop is in order. It is true that we are approaching the 1200 resistance levels again, and many individual stocks are pressing up to their resistance levels as well, but this has been a vicious rally, and still has a lot of momentum. There are a lot of traders who were caught shorting the breakdown through 1100 only six trading sessions ago. Those traders (if they didn't cover) are still seriously under water. There is also a lot of institutional money that threw in the towel when we broke 1100 as well. That money may be second guessing their move. I still expect that pullbacks will be bought by those participants who are under-invested. That adds some stability to what would seem to be an unsustainable rally.
There is also another potential catalyst.....earnings season kicks off tonight. Many stocks are priced in for very disappointing results. If the results aren't quite as disappointing, there could be further upside here. In summary, we've had a helluva rally, but I wouldn't be surprised if some of these individual resistance levels are taken out.
