Strong earnings reports from Goldman Sachs and Intel last week seemed to keep the bullishness intact for the time being. Technically speaking, the S&P; 500 is now facing an important resistance level at 951. The next few days will be a test to see if there is enough follow through buying to break to the next higher level or if this marks a point where renewed selling will pull prices lower.
Helping the bullish cause today was an announcement from CIT that a deal with bondholders was made to keep the company afloat. At the same time, the U.S. index of leading indicators rose 0.7% in June supporting the view that the recession maybe nearing the end.
I sure won’t hold my breath and will keep my mostly defensive positions in order to be prepared for further volatility. This is not the time to try to be a hero when it comes to taking undue risk.