I won’t dive all the way into the discussion this time around, since I’ve been analyzing the daylights out of this chart for days now. The one thing I was most interested in - potential support somewhere around 1260/1275 - has indeed materialized as support for the S&P 500. The chart below tells the tale. Take a look…it’s pretty obvious.

So what? Well, there’s no ’so what’ just yet…at least not one we didn’t know about. My only message is just to not make any assumptions. The market is holding up here, so jumping into bearish trades is something of an unmerited risk. In the same light, it’s not like the market has bounced off this support line either. No, this is indecision taking shape when push came to shove.

My expectation is still the same - I’m looking for the SPX (and all indices) to rise slightly in the wake of a harsh dip. I’m not counting on a full-blown rebound until the VIX spikes. That may indeed happen soon, but we don’t know that it will. Still, I’m more trusting of the VIX’s clues than I am the market’s hints….the market’s hints have been misleading of late.

Some of you have asked how we’ll know if the bullish effort is a fake-out or for real. I suggest using what I’m using - the 20 day moving average line. I plotted it on black on the chart. If the S&P 500 moves above that level, I’ll be more open-minded about a rally. (Even then, the 20 day line has only been mediocre in this role lately.)

However, I stand by my early opinion….until the VIX spikes, I don’t think the bulls should dig in too deep.

Stay tuned.

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You don’t need me to tell you half of the trading battle is timing. Owning a great company isn’t enough anymore - picking the right stocks at the right time is critical to making any real money in this business. With that in mind, three charts caught my eye in Monday.

One of them won’t surprise you a bit, and another won’t entirely surprise you….they’re both on our small cap stock watchlist. The third one is a first-mention (or first one a long time anyway) - a large cap biotech familiar to all of us.

I mentioned this a couple of times last week, but after seeing yesterday’s bullish effort it bears repeating - I have to wonder if Spicy Pickle (SPKL) is poised to pop.

The stock pulled back rather sharply last week, but it may have been just enough to convince the majority of traders that now’s not the time to be in. Of course, the best time to get into a stock is when it looks like nobody wants it….the way Spicy Pickle looked last week.

Like I said, it’s just a feeling. It’s a feeling I was feeling back in April too….before the upside move.

On a similar note, Bio-Matrix (BMSN) has put a pretty quick end to the pullback following its recent encounter with new 52-week highs. The peak of $1.29 on the 13th led to a low of 86 cents by the 24th. But, BMSN found footing again; now it’s trading at $1.00. This stock’s uptrend has been resilient.

Still no word on Bio-Matrix’s pending license inspection. It should be soon, if it hasn’t been completed yet. I’m pleasantly surprised to see the stock do as well as it has without that news in place. When-and-if they do get successfully licensed, I expect BMSN to really move….at least for a short time.

On that note though, I have to wonder if we should be thinking like short-term sellers shortly after any announcement from Bio-Matrix. The stock’s been a hot one, and at this point I’ll concede the possibility that getting the tissue bank license is already priced in. ‘Buy the rumor, sell the news’ is a cliche for a reason…as is the whole thing about a bird in the hand. Once the dust settles and the volatility is out of the way, then you can start looking for another entry point. I don’t want to miss a good exit opportunity though, even if only for the short term.

Just something to think about - we can cross that bridge when we come to it.

Now, about this large-cap biotech stock…

I’m not totally sold on the idea just yet, but I could be easiliy convinced that Amgen (AMGN) is positioned for a rally.

I’ve mentioned I like biotech a couple of times recently, and Amgen certainly falls right in the framework of that point of view. Though I’m still looking specifically for smaller biotech companies, I’m not going to pass up a good large cap opportunity.

The chart is the key for me. We’ve already seen AMGN work its way past a moderately significant resistance line. We’re also on the verge of seeing it move back above its 200 day moving average line….for the first time in over a year. If we see it happen, I’m in. I’ll let you know if it happens; we may even turn it into an official trade.

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