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General Mills (GIS) appears ready to break key resistance and its all-time high in the 40 1/4 area. The stock has been consolidating in the 38-40 area for the last 2 1/2 months, and closed Friday at 39.96. A move to 40.30, our buy stop entry price, would confirm the breakout for a move to the 40.94-41.28 target range.
Originally published on TraderHR.com.
Well, the Dow has rallied about 1800 points in the past couple of months, since the October 4th low. Nothing's really changed since then – – the U.S. is still, by any realistic measure, bankrupt, and the systemic issues of the Euro crisis are probably worse than ever.The "super-committee" to address U.S. debt did a joke of a job, even to a cynic like me, since they gave up pretty much instantly. Sentiment, however, has changed mightily, and we have another big rally on our hands today.
I still focus on cash as my only acceptable "long" position, in spite of potential opportunity costs. My disposition remains to move my short-position-percentage up or down, depending on the circumstances. I remain in "risk off" mode, at about 30% short, 70% cash.
One item I've pointed out, tongue-in-cheek, as an interesting reversal indicator is ERY, but today puts a bullet through that fellow's forehead. It was cute while it lasted, but this – like DUG – is getting trampled to lifetime lows.
It's generally best to be wary of calling for reversals in strong uptrends or downtrends, but there are some nice counter-trend scalps to be taken in these, and equities are definitely in an area where we we would normally expect to see at least a short-term reversal.
One of the best guides for these is the bollinger bands on the daily Vix chart. There's a lot of talk about Vix buy and sell signals from these, but these tend to be mediocre performers, and in the nature of the way these signals form, frequently just tell you that a reversal has already happened, without giving any opportunity to get in as the reversal is actually taking place. A better guide in my view is to look for reversal when Vix initially hits the outer bollinger band. This can sometimes fail badly, but the hit rate is much better than on the more commonly used Vix Buy or Sell signals and the entries tend to be much better. I've marked these up on the Vix chart for the last year with the SPX as the background, and I've added arrows to the two notable failures over this period. You'll note from the chart that Vix has been testing the lower bollinger band for the last three trading days:
