Yesterday I posted some long picks, in case the bulls are able to keep the party going. As I have mentioned, looking at SPY, last week's high represents a key technical level. A convincing break above will likely lead to a short squeeze. Beware of the headfake, however, since a false breakout would be in character for this market.

On the flip side, breaks below two nearby levels would increase fear in the hearts of bulls, and likewise embolden shorts. A move below 83.63 would give us a lower low. More importantly, below 82.75 technical support becomes far weaker, and traders will be thinking about the broken ascending wedge. Incidentally, over at Slope of Hope, BearsRus has provided a chart of SPX showing prior ascending wedge breakdowns. It's worth a look. Here's the 30 day chart of SPY again to see the levels I have mentioned.



I am in wait-and-see mode. If the market looks like it is breaking down, I'll be watching some of these stocks as short candidates:

- MIL: I am already in this one. Price broke down with volume last week. Perhaps it can see some short term upside, but looks unlikely to get through resistance near 60.00.



- CMTL: I got this from Tim Knight. Price saw a massive breakdown after earnings, and has moved up over 60% off the lows.



- NTRS: Price broke down after earnings, and has retraced to just under the 50 day moving average.