Being responsive to the market’s signals rather than being predictive will paid off

The major market averages rose Friday, putting the market into positive territory for the second-straight week. The S&P 500 index rose 5.37 points, to 1109.55.

The 200-day moving average for the S&P 500, which is now at 1115.6, is a major resistance number. A break above it would likely lead to a challenge of the double-tops at 1130, which is another major area of resistance. Major resistance lines are formed by blocks of sellers, and thus, they usually block advances.

Investors should prepare to sell any lagging positions and traders should review their list of likely shorts and other bearish strategies.

So we will watch and wait. There is no need to jump in on the long side or short side at this moment unless the market tells us that its intentions are bullish or bearish. Sticking to our basic principle of being responsive to the market’s signals rather than being predictive has paid off so far this year, so we will wait for the market to hit 1115 or as high as 1130 before adding any new position.

Today I read an very good article, It give me a bigger perspective about our economy. I want to share with you and sum it up as follows:

1. The pace of recovery in output and employment has slowed in recent months. 
2. Household spending is increasing gradually, but remains constrained by high unemployment.
3. Modest income growth, lower housing wealth, and tight credit.
4. Business spending on equipment and software is rising; however, investment in Nonresidential structures continues to be weak.
5. Employers remain reluctant to add to payrolls. 
6. Housing starts remain at a depressed level. 
7. Bank lending has continued to contract.
8. The pace of economic recovery is likely to be more modest in the near term than had been anticipated.