Shooting for the Highs

Stocks surged as soon as futures markets opened Sunday evening and followed through as cash trading opened this morning.

While most bloggers reflect great certainty that the S&P, Dow and other major indices will more than handily take out the highs, I'm still less than convinced.

One thing that troubles me, aside from everyone being so bullish, is that my statistical indicators show that momentum is still lagging.  With such a powerful surge over the past couple of weeks, I would be expecting some of my key indicators to reflect greater strength, instead of weakness.  The divergences I see in my numbers lead me to believe that either the SP will not take out the recent highs and if it does, it won't hold and we will close out the week having tested the highs but failing.

I still hold a number of October 192 calls purchased near 190 on SPY.  As we continue to move up though, I've been adding puts and put spreads just in case.  If SP goes as high as many are predicting, I'll surely make more than enough to cover the losses on the protective puts.  And should the market drop hard, I think that I would be equally as successful. 

I can't begin to say what might slow the market down.  Again this evening, futures are up across the board.