Wednesday Update

My system declined to +1200 and the sell signal is still on. The $HGX closed in the support area of 80-85 today which is the lowest risk point to buy if you believe the uptrend is intact. Any close under 80 would call that into question and a break of 73.50 would mean at the very least a much longer period of consolidation, possibly another 6 months, until 100 is broken and it would signify that I am no longer in sync with this index and I would avoid any new purchases in housing at that point. If the uptrend is intact, then I still wouldn't expect a break of 100 until next month at the earliest and the initial bounce out of this support area should fail and have to come back and test this low. One of the better ways to capitalize on any downside is to short the Aussie/Yen pair which I did last night near 74 cents and have since covered under 72 cents. Any bounce to near 73 cents can be shorted for a potential move to 70.50 cents while stops should be at 74.50 cents. If you believe the equity market is going to falter, then the single best way to play that is to buy the Yen. It will be a very interesting two days ahead with jobless claims, PPI, and index options expiration tomorrow while Friday brings CPI, U of Michigan sentiment, industrial production, capacity utilization, and equity options expiration. These reports will either halt the damage from that retail sales number or cause a further sell-off which will increase my Yen buying. Although I was buying the XHB today and various components of the $HGX hand over fist, I won't buy anymore in this index if support is broken and the market is forced to consolidate for much longer but I will increase my exposure to the Yen.