Tuesday Update

My system has flatlined again and the neutral signal stays on. With volume drying up, we could see some flashy moves such as Gold once again hitting new highs tonight and the Euro/Dollar knocking on the 1.50 door. Perhaps, we reach my Dollar target while the liquidity is low. Have a great holiday and I'll be back on Monday.

Monday Update

My system has flatlined and the neutral signal is on. A move higher in my system will equate to new highs in the major indices although, of course, many indices still haven't broken their October or even September highs. The Euro/Dollar which has a strong correlation with equities still hasn't broken its October high. If the data out tomorrow does provide the impetus for a move higher, then the S&P 500 will, at a minimum, hit the 1120-1125 area.

Weekend Update

My system has moved lower to +325 which confirms the sell signal. However, this isn't the same as a sell signal after my system hits +1000. The edge isn't there and it becomes more of a flip of the coin trade. If the bulls are going to take back the trend, it should be in the next two days or they risk the bears gaining some momentum that could drive my system back below the zero line. Gold has launched higher again tonight and the Dollar is down significantly but it still hasn't hit my target. The Aussie Dollar seems to be diverging somewhat from Gold as it has not yet hit new highs while Gold continues its ascent so that is a correlation to watch to see if this divergence continues. This is a holiday shortened week in the US which likely means a lower volume week and my last post this week will be on Tuesday and then I will be back next Monday.

Friday Morning Update

My system moved lower to +425 yesterday putting the sell signal on although a confirmation sell signal in my system is needed today. The S&P 600 spent all of one day in net positive territory and is back in net negative territory at the moment. I will post this weekend. Enjoy your Friday!

Wednesday Update

My system moved higher to just a smidge above +500 and the buy signal is still on. The S&P 600 finally went net positive today also by a smidge which makes it the last component of my system to go net positive. The jobless claims numbers might stir the market a bit more but we are firmly in the low volume, holiday market until the end of the year where we might get a couple of more days with decent volume and I would expect those during options expiration and around the turn of the month. Of interest is that Japan's Nikkei is hitting its lowest point tonight since July as they actually followed through on the correction that started at the end of August for them. Also, the 10 year Treasury yield is sitting both on its 200 day SMA as well as the uptrend line from last December's lows so a major technical decision point here and a break lower should see the yield get below 3%. Japan's stock market and the 10 year Treasury yield have had a very strong correlation for many years and it appears to be the current situation as well. If Japanese stocks don't find a bottom here, the yield could break lower very soon.

Tuesday Update

My system has moved higher to +450 and the buy signal is still on. My Bank/Tech index is now net positive and the S&P 600 is just barely net negative and could go net positive as soon as tomorrow. The fact that my system will be at or near +500 before the small caps go net positive is not a positive development for the bulls. This is a market riding on the backs of a few large caps and some holiday lift. The move in Microsoft to exactly $30 has options expiration written all over it and I have never found it to be positive when it leads the market after a long rally. That said, the Dollar hasn't reached my target yet and if it chooses to do so, it would certainly cause more upward lift for equities. Let's see if the market moves a little more tomorrow with the CPI and housing starts numbers...

Monday Update

My system has moved higher to +350 and the buy signal is still on. The small caps are still net negative but made a large jump towards net positive territory today. I think the big question is whether the rally will carry my system back above +1000. The biggest news of the day was Bernanke's comment on the Dollar which although a massive surprise to the currency market, it only temporarily supported the Dollar before it started sinking once again. The Dollar still has not reached my minimum target of 74-74.25 and it sure is taking its sweet time getting there.