Friday, May 25 Daily Assessment

First Wave has Landed!

Yesterday was quite a ride! Up nearly a 100, down almost as much. Not exactly what I expected, but close. It's not going to be an orderly retreat. Even today, I think we could see another up day, based mostly on M&A optimism. Coke has announced a major $4.1 billion dollar acquisition, which will tank KO, unfortunately. But the market is overbought by any standard measure. I'm evacuating my long positions, falling back as it were to a more secure level. I predict that SPX will drop back to its level of support at 1500 over the next few sessions, and the DOW should find solid ground at 13,300. But probably not today.

Today is the beginning of the first summer holiday long weekend, however. I don't expect significant trading volume unless there is a genuine downdraft of 200 points or more. Today is a day for unwinding positions. I'm exiting my June longs, and taking profits on my oil stocks. If GOOG retreats a little, I think I will take a major position there; GOOG is overdue for a leg up, and the internet stocks are on fire (relatively speaking).

Summary Outlook: Short-term bearish, long-term bullish.