Tech Earnings Overshadow Negative S&P Outlook

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MARKET UPDATE: A lot of action was packed into this Holiday shortened trading week. The week started with the push-pull of Standard & Poor's negative outlook on US debt and good tech earnings. The "push" won the battle and market screamed higher to end the week.

The major indexes are at their February highs thanks due to good earnings. The positive news led to big opening gaps Wednesday & Thursday. These gaps are somewhat troublesome as gaps always get filed, it is not a question of "if" but "when". The move higher has been on light volume and very thin institutional buying. Additionally, the technicals indicators were turned on their ear(s) as this move caught many off guard.

For now, the big, smart money is sitting on the sidelines. Until the market either establishes new highs (which would be bullish), or stalls and rolls over (which would be very bearish), we recommendstaying on the sidelines as well. Once the market provides some direction there will be some very good profit opportunities available. Keep you powder dry and wait for the right entry.

Areas of support remain at S&P 1303, 1292, 1280 and 1250. Resistance remains at S&P 1345, 1350 and 1400.

What are your thoughts on the market? Place your comments below! BOOKINGALPHA UPDATE: Excerpt from Subscribers Weekly Open Positions Review:

Trading was light (non-existent) this week as we waited for the direction in the market. The market fooled many folks and rallied hard as the week wore on.

Risk/reward ratios have gotten skewed as the VIX has been crushed. Commodities are flying, the dollar continues weakening, and the market is only listening to the earnings reports that it wants to (those that justify a rally). Financials are sucking air for the most part but tech is booming.

A lot of earnings will be released this week and then there is the Fed as well, not to mention a plethora of economic data. We will probably sit on our hands until the middle of the week unless tha market comes flying out of the gate Monday and Tuesday. In that scenario, we may start throwing out some call spreads.

Our attempted AAPL earnings play didn't trigger but would have been a nice trade. However, we weren't willing to chase the position (by lowering our credit received) as the stock ramped up the day before earnings were to be released. There will be many more opportunities to play AAPL.

One day AAPL will miss earnings estimates (by only making a cajillion dollars instead of an estimated shmazillion) and the stock will get smashed. It may not be in my lifetime, but one day it will happen :) . I am not an AAPL bear in the least, just a realist and the company is just a little too perfect. I love playing the weeklys on it though. It is a great stock to trade actively.

Now that the market has informed everyone that it refuses to go down, we will be looking to sell call credit spreads in the coming week or so. We are getting this feeling there is a blow off top scenario in the making. Our strategy is perfect for that setup as we will let the market run and layer on OTM spreads.

This is not the kind of market you want to over-trade or be short. So, wait for your entry and let the market come to you.

Stay tuned......happy trading......and thank you to everyone for supporting BookingAlpha!

What are your thoughts on the market? Place your comments below!

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