Resistance At the All-time High Has Been Stiff. Cash Is King Until We Breakout/Breakdown

Posted 10:30 AM ET - Yesterday, the market staged a relief rally because the vote in Crimea was orderly. Putin addressed the parliament this morning and he said that Russia does not need Crimea. It will annex the region to satisfy the people. The S&P futures rallied 15 points on the news. Putin also said that he does not plan to advance further into the Ukraine. Anyone with half a brain knows this is a bunch of crap. He will flood Kiev with Russians/Russian sympathizers and they will invoke protests in coming months. Then he will be "forced" to go save his people. The Ukraine is the "crown jewel" and Russia wants it back. The hand slap given by the US/EU won't deter him. These sanctions mean nothing. The market does not care about Crimea and it might not care about the Ukraine. The FOMC meets this week and Janet Yellen is expected to change the rhetoric. The Fed will keep tapering and the reaction favors the downside. The big event from my perspective comes Monday when the flash PMI's will be released. Conditions in China continue to slip and the PBOC has not eased. There are rumblings that other investment trusts are on the brink of default. Any economic decline will push these weak institutions over the edge. If these defaults increase, credit fears will rise. Domestic economic releases have been decent. Traders have given soft data a free pass because of horrible weather conditions. Temperatures are on the rise and pent-up demand should be unleashed in coming weeks. If not, the market could correct. From this point on, good news will be expected. The market is within striking distance of a new all-time high. In the last two weeks, we have seen sharp reversals each time resistance has been challenged. That is a sign of selling pressure. Corporate profits have been strong and earnings season is only a few weeks away. Profit margins are healthy and any uptick in demand will go straight to the bottom line. The price action has been very choppy and this is a low probability trading environment. Stocks could swing in either direction. I was stopped out of my put positions yesterday and I took my lumps. My size has been very small so the damage was contained. I won't get long unless we pullback to major support level. Asset Managers can sense the selling pressure and they won't chase near an all-time high. Bullish sentiment is high and speculators need to get flushed out. If the market continues to march higher, I will stay on the sidelines. If the SPY trades below $185, I will by puts. The price action feels a bit toppy. This is a great time to be sidelined. If you are trading, keep your size small. We need to let things play out. Once we have a breakdown or a breakout we will know how to position ourselves. Once the early rally stalls this morning, we could see some selling pressure. The market wanted to sell off before the open and there could be some nervousness ahead of the FOMC. . .

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