As I stare at the S&P chart (an act I do far too often for any otherwise mentally healthy person), I am finding it hard to conjure up a circumstance where we get to my oft-cited 1050 figure. My wild-assed guess about that the S&P is going to do over the next year is along these lines (literally):
At this point, I do not think we have a market which is (a) So Expensive Everything Is a Short (e.g. October 11, 2007), nor do we have a market which is (b) So Battered Everything Is a Buy (e.g. March 6, 2009). I think it's more of a stock-picker's market, and I've got a couple of examples of that.
The first one is our old buddy Celgene, which tumbled hard yesterday. This is an example of a stock which doesn't care if the market is soaring. The pattern is so powerful, it eventually succumbs. This is a real "keeper", as I am holding on to my shorts as well as my puts on CELG.
By contrast, we have this evening's after-hours success story, RIMM. This member of the "four horsemen" (now that is a term I bet you haven't heard in a while!) lost nearly 80% of its value (red arrow), but it did a nice double-bottom on a retracement (tinted area). I bought RIMM at $40, and it is trading at nearly $60, the area I've circled.
Isn't that nice and clean? There's nothing I enjoy more than a trading range bounded by Fibonacci levels. Could RIMM move higher still? Of course it could. And if it blasts off tomorrow morning and never looks back, I guess I'll hang on to it. But if it noodles around the upper 50s and lower 60s and just churns away, I'm heading for the exit.
