Looking To Buy No Matter How High

This will be my motto today as the last couple of days of market action remind me of the last year's August and November bottoms.

Yesterday's action followed by a sustained move up in pre-market overnight suggests the bottom is in. I waited to write after the retail sales report because the market could have changed course easily in case of a bad number.

Looking back at yesterday, I failed to notice that the market had touched support from March (on the hourly chart) and, as a consequence, I did not think the 1-2 pm rally was a valid turnaround.

So, here is my plan to buy on strength. I will do it reluctantly since I like to fade weakness for my long entries, but I have to take what the market gives me. If this is the beginning of a bigger up move then buying strength is not a problem. Also, traders will find it difficult to buy such a big gap up and this somehow gives me some comfort because it means I am not joining the crowd in doing the obvious thing.

The market may behave today similar to the 1st of December and the 1st of September 2010. On days like these the best points for long entries are:

> immediately at the open if the market opens exactly above support (as was the case with European markets overnight);

> after the first small pull-back (no more than 3-4 points) that can come into the 10 am economic release or after it;

> on the first shake-out after lunch if the market has rallied until then.

I will use these points to build a long position. Bigger corrections (say more than 6 points) will make me sit on the sidelines. The market can go today as high as 1290 on the September contract.