DummySpots.com

The S&P 500 cleared the 1275 resistance area today. That’s big news. Gives you a very nice trade setup on the follow-through or the failure. Volume is puny, but that’s OK. The breakout will show up on everyone’s stock screens tonight, and no doubt the faces on TV will be yakking about it all weekend. Monday should be a big tug-of-war between

• The buyers who reflexively react to the breakout news, especially those who live in fear of being left out of the Big Move.
• The sellers who only see the “overbought” level of their oscillators, not realizing the oscillators’ predictive value just went to near zero.
• The (short) sellers whose greed causes them to try and pick a top, without waiting for confirmation.
• The professionals who make a living spanking all of the above groups, and will happily take either side.

How do you tell which side will win the tug-of-war, so you can be sure you’re on their side? If you’re greedy and scared of missing something, reach in your pocket and get a quarter. Now flip it. Heads, go long. Tails, go short. How’s that? It’s as definite a predictor as any at this point.

If you don’t fit into the above groups, you may have learned the very painful lesson that hanging onto the money you have comes before trying to make more. If you’re patient enough to wait a short while, just sit back and watch the action unfold. A big volume day on Monday would be a good vector pointing the direction to trade, and you’ve got a nice tight stop either way.