The Trend

Tuesday Update

2012-02-14T21:17:00.000-08:00

My system moved lower to +1325. Futures are up substantially at the moment. Let's see if it holds and the market makes a run at 1370 tomorrow. Both Spain and Italy are right under their 200 day SMAs...

Monday Update

2012-02-13T21:58:00.001-08:00

My system moved lower to +1375 on Friday and then flatlined today. The all-time high reading in my system on the S&P 600 occurred last Wednesday and it has come quite a bit off of that since then so let's see if it goes back up there to a new high or if that turns out to be the highest reading. Apple is in a nice parabolic move at the moment so let's see if that is enough to move the market past 1370 and eliminate one of the three remaining long-term scenarios.

Thursday Update

2012-02-09T22:21:00.000-08:00

My system has flatlined today. The S&P 600 came off its all-time high in my system but that doesn't mean it can't go right back up to new highs. Still it bears watching every day. When previously discussing the three potential long-term scenarios for the market, I mentioned the bull trap scenario would mean a top in Q2. This is the scenario where we break above 1370 but the market tops not long after that. I now think this scenario would more likely have its top in Q1, not Q2 which means sooner than expected. A move above 1435 would kill this scenario and leave only one remaining scenario which is a move above 1600. Of course, the scenario where we don't get above 1370 is near elimination but not officially out of contention. If we are going above 1370, I would expect it this month. One of the more glaring divergences in the market is that the market is near a high but the Dollar is nowhere near its lows. It will be interesting to see which one breaks down first, equities or the Dollar.

Wednesday Update

2012-02-08T21:40:00.001-08:00

My system moved higher to +1400 on Friday, flatlined on Monday, moved higher to just under +1425 yesterday, and moved higher to +1425 today. The S&P 600 has made two consecutive all-time highs in my system over the past two days. The reading these broke occurred on April 23, 2010 which was one day before the market topped and entered a significant correction which included the flash crash. In that rally that led to the April 2010 top, there were 35 trading days after the overbought buy signal before the market topped. Since the most recent overbought buy signal, there have only been 20 trading days. There are plenty of arguments for the bears and bulls alike but 20 trading days on an overbought buy signal is definitely one for the bulls. The bears need a weekly close below 1265 to reinvigorate the bear trend. For the bulls, a move above 1357 will make a move above 1370 a foregone conclusion and will eliminate one of the three long term scenarios. If that were to happen, the nice thing is we will be able to know which one of the two remaining scenarios will win out in a relatively short amount of time.

Jobs Eve

2012-02-02T21:55:00.001-08:00

My system moved higher to +1325. Out of 2054 days of trading in my system, the S&P 600 today hit its 6th highest reading ever. To put this into perspective, since the end of 2003, 99.7% of trading days have had a lower reading in the S&P 600. That is some rarefied air. I will let you come to your own conclusions. I will be taking an extra long weekend and my next post will be on Wednesday evening.

Wednesday Update

2012-02-01T22:08:00.002-08:00

My system flatlined today. It looks like the market is continuing the sideways action until the jobs report. Unfortunately, there is not much else to say for today.

Tuesday Update

2012-01-31T21:42:00.000-08:00

My system moved lower to +1275 today. Since my system has been above +1000 in January, this is the first time we have seen two consecutive downticks in my system. The big ISM number is tomorrow with the jobs number coming on Friday not to mention a possible mortgage settlement with the banks and the potential agreement with the creditors in regards to Greece. Could be an interesting three days ahead...

Monday Update

2012-01-30T21:21:00.000-08:00

My system stalled on Friday and then moved lower to +1325 today. The overbought Buy signal which is when we moved above +1000 in my system earlier this month should be broken by the bears if the bear market that started on May 2, 2011 is still alive. The day of that signal had a low of 1280 so the bears need to break this to prove the bear market is alive and well. Interestingly, France, Korea, and India are all testing their 200 day SMAs. More interesting is that the $BSE (India's index) failed exactly at the 200 day SMA in July and October which coincided with the exact top in the S&P 500 in those months and now India may have failed again at its 200 day SMA for the third time which seems to have coincided with at least a short-term top in the S&P 500 and only time will tell if India's failure at its 200 day SMA has again pinpointed the exact top in the S&P 500.

Thursday Update

2012-01-26T21:08:00.000-08:00

My system moved higher to +1400 today. The market is still in this 1296-1347 battle area. A close above 1350 should mean that 1370 gets taken out but a weekly close under 1265 should mean the top is in. The 1245 level is now where the uptrend is confirmed over.

Wednesday Update

2012-01-25T21:58:00.000-08:00

My system moved higher to +1375 today. As a reminder, +1850 is the absolute maximum we can go to although I don't think we have ever hit +1600 let alone +1850. So, there is not much room from here at least in my system. As long as the market doesn't have a dramatic reversal over the next two days, we have likely avoided the worst long term scenario which would have the S&P 500 under 100 (that's a hundred) by 2022. So if nothing else, we can sleep better now that the world is no longer going to fall into some devastating depression. There are only three long-term scenarios in play now, one bearish now and two bearish later. The scenario that is bearish now would need the market to not have a daily close above 1350 and then for a weekly close to occur under 1265. Now for the two scenarios that are long term bearish but short term bullish. If the bulls take the market above 1370 but then reverses not long after, the top will be either this quarter or Q2 and then we head down to at least under 1074 and likely under 1000. This scenario doesn't bode well for the long term so if it occurs I'll go into that at that time. The other scenario would be extremely bullish this year and take the market above 1600 this year and top out in Q4. I think this is extremely unlikely but it is still possible right now. The problem with this scenario is a devastating decline afterwards that should take us to new nominal lows in this secular bear under 666. This is what I call the true "kick the can" scenario but if the market goes this direction, the can will eventually be kicked off a cliff in 2013. At least one and possibly two of these three scenarios will be eliminated this quarter which means the moment of truth is near in regards to the true intentions of the market. The one thing that is clear at the moment is that the market is running out of time in preventing the bearish cycle from occurring. The bear will either reassert itself in Q1, Q2, or Q4. If the Fed launches QE3 and can weaken the Dollar substantially, then the bulls may get the scenario that includes a massive ride up into Q4 but again I think this is extremely unlikely.

Fed Eve

2012-01-24T22:03:00.000-08:00

My system moved barely higher to exactly +1300 today. Tomorrow we get the Apple euphoria and then the Fed comes out with an early announcement followed by their press conference and their introduction of their long-term interest rate forecasts. While these forecasts may move the market, from a practical standpoint they are useless as the Fed has proven to be useless when forecasting the economy especially after those egregious 2006 transcripts. How is it possible that these guys didn't see what was so obvious? It makes me wonder about how these guys get into these positions. You would think they would understand bubble dynamics after all of those academic years but apparently not.

Monday Update

2012-01-23T21:56:00.000-08:00

My system flatlined on Friday and moved higher to just under +1300 today. The Fed comes out with their long term interest rate projections on Wednesday but earnings should take center stage as this is the first really big week of earnings in terms of number of companies reporting. The $DJW closed right at its 200 day SMA and just missed surpassing its October high today. With the market already overbought and sentiment a bit complacent, the bulls are going to want to see the $DJW move much higher to confirm the world is actually going to follow the U.S. market.

Thursday Update

2012-01-19T22:02:00.000-08:00

My system moved higher to +1275 today. The market now has to hit 1235 to kill the uptrend. In terms of long term scenarios, we are very close to eliminating the most nightmarish of all possible scenarios. Although there are still some pretty negative long term scenarios that are possible, the elimination of the aforementioned one would help me sleep a bit better at night :)

Wednesday Update

2012-01-18T21:54:00.000-08:00

My system moved higher to just under +1225 today. The Nasdaq 100 is about to break last year's high. However, when you look at the Nasdaq 100 equal weighted index, it hasn't even moved above October's high yet. Clearly Apple's move to new highs is distorting this index. The same thing applies with the S&P 500 and its equal weighted partner but the discrepancy is not as dramatic. The uptrend won't be confirmed over until 1225 is hit as of today and this number will continue to move higher. If the market were to start dropping sharply right away, then the 1230-1240 area would likely be where the uptrend is confirmed over.

Tuesday Update

2012-01-17T21:27:00.000-08:00

My system moved higher to +1175 today. It continues to be a wait-and-see market to see where the eventual decline begins. Friday should be an interesting day as not only is it expiration day but Google, IBM, Intel, and Microsoft all report after the close on Thursday so we should see some fireworks.

Thursday Update

2012-01-12T22:20:00.000-08:00

My system moved higher to +1125 today. The Euro and Pound are currently partaking in their requisite relief rallies. There has been a very obvious divergence this week with the commodity currencies rallying against the Dollar while Euro-related currencies faltered against the Dollar. Now the Euro-related currencies seem to be catching up for the moment. The big question for the market going forward is when the down leg starts. If the market can hold up in this earnings season, then the bulls may be able to hold up the market for most or all of the 1st quarter. However, I then don't see a way in which the bulls will be able to pull that off for the 2nd quarter. My next post will be Tuesday evening, have a nice holiday...

Wednesday Update

2012-01-11T22:17:00.000-08:00

My system moved higher to +1075. The bulls don't have to fret until we fall under +1000. In a few hours we get the BOE and ECB decisions. Will the Euro and Pound get relief rallies tomorrow? We shall see...

Tuesday Update

2012-01-10T21:53:00.000-08:00

My system moved higher to +1025 today which is an Overbought Buy Signal. Since the bear market began back in May of last year, there have only been a couple of Overbought signals and they eventually didn't bode well for the bulls. There was one on July 11th and one on October 24th and both led to decent declines. The sell signals after these two overbought signals were on July 11th (Yes, same day as overbought signal) and November 16th. Eventually there will be a sell signal again when we drop below +1000. Because of the move above 1292, we are now at an interesting long term decision point. I will wait to see where this rally ends before going into that discussion. The resistance zone for the bulls is the 1295-1347 range but that is such a large range that it doesn't help us too much. However, a move above 1347 and we likely will take out the 1370 high again changing the long term structure which is both good and bad and again I won't go into that here unless we actually get there. My own feeling is that the 1295-1347 zone will end this bear market rally and we will need to go down for another leg. The way that down leg happens is the big question, whether it will be falling off a cliff or a more gradual decline. I'm not sure how long bulls can hold up the market but I believe the longest the market could stall is until April. If we get a stalling situation, then the odds dramatically increase for a sharp drop scenario.

Monday Update

2012-01-09T22:11:00.000-08:00

My system flatlined on Friday and moved higher to +925 today. Both $BVSP and $FTSE are toying with their 200 day SMAs. As for the $SPX, the downtrend confirmation level has moved up to 1215. The holiday shortened week next week which is also options expiration has some decent earnings reports but they really pick up for the three weeks after that. Looking at the huge open put interest at 1250 as well as decent open call interest there, I would be surprised if the market allows those investors to make money before the options expire next week so 1250 could be a magnet.

Jobs Eve

2012-01-05T22:21:00.000-08:00

My system moved higher to +900. A move to +1000 looks likely which means 1292 is likely to get taken out. What happens after that will be more important. As of today, the market will confirm a downtrend if it hits 1210 but by the time we would get there it is likely that the downtrend confirmation will be confirmed somewhere between 1210-1235 as this is a dynamic target. If we break 1292 first then the market will be worth shorting on a break of 1248.

Wednesday Update

2012-01-04T21:32:00.000-08:00

My system flatlined at +800 today. Nothing else to add for today as the market gets ready for the jobs report on Friday.

2012: The Year of Living Dangerously?

2012-01-03T22:07:00.000-08:00

My system moved higher to +800 today. We are probably going to move to the +1000 level at a minimum. Looking back in the archive last January at my forecast for 2011, it turned out to be a decent forecast although I underestimated how high the Euro would go. 2012 is the year which is crucial to the long-term picture but which is incredibly hard to forecast. The longer the bulls can stall and prevent the inevitable decline, the better the situation will be for very long-term investors. If we were to see a severe decline below 850 in the S&P 500 this year, it will be a very negative situation for the long-term structure of the market and could delay the end of the secular bear for another decade. If we were to hold in the 1000-1074 area, this secular bear will probably end in or near 2017 so a mere 5 years away. A move into the 850-1000 area is a gray area but the odds are with the long-term bulls if this occurs albeit just barely and by no means assured.

Goodbye 2011

2011-12-20T22:27:00.000-08:00

My system moved higher to +100 today. I thought I would end the year on a good note as the market bounced right on schedule after yesterday's post. I have made plenty of good and bad calls this year much like any other investor making a public statement about the market and next year will be no different. I will go ahead and make one more call for the year and say that over the last 7 trading days of 2011, the market will end within 3% on either side of 1257 which was the opening for 2011. As for 2012, this will be an important year ahead in determining the remaining severity of the secular bear market. What also will be crucial is the duration of the current cyclical bear market. If the market bottoms in the 2nd or 3rd quarter of next year, then the decline will likely be a much more shallow affair. The worst case scenario would be a bottom in the 1st quarter of 2013 and the decline would be steep and the implications going forward would be vastly more negative. However, this crash is unlikely to happen for one simple reason and that is because the investing community including myself are positioned for this dire scenario in case it occurs which makes it very unlikely to occur. The likely scenario for 2012 is that we break 1074 but maybe not by much. The odds are high for a move into the 1000-1074 range. There is an outside chance of a move to the 850-1000 range and for the moment I will just label this as possible. Anything under 850 is very unlikely for the aforementioned reason that everyone is ready for a crash but if we do go there anyways then that may alter the duration of the secular bear market as well as the structure. The last possibility for 2012 is a move to new highs above 1370 but I think this is unlikely even though many are bearish. Although this scenario would be positive for the long term bulls in terms of the structure of this secular bear market, it would mean that another severe decline, likely worse than 2007-2009, would be likely in the 2013-2014 timeframe. My next post will be on Tuesday, January 3rd. Good luck in 2012 and have a safe and happy holidays!

Monday Update

2011-12-19T23:02:00.000-08:00

My system moved lower to +25 on Friday and moved lower to -100 today. The North Korean situation is a definite wildcard here at the end of the year. Any surprises from there will accelerate the Dollar move higher. Throughout this secular bear market, equities have always staged at least a short-term rally in late December or early January. The only year to sort of veer from that was 2007 when the market topped a bit early on the day after Christmas and then went straight down into a low in January. So the odds are high for at least a 3-5 day bounce in the next 13 trading days.

Thursday Update

2011-12-15T22:15:00.000-08:00

My system moved lower to +100. Not much to add today as we drift towards 2012. I will post again Monday evening and Tuesday or Wednesday will likely be my last post for the year as the market is comfortable treading water until the new year begins.

Wednesday Update

2011-12-14T22:34:00.000-08:00

My system moved lower to +200. A move to 1180 confirms the bears have shifted the market into a downtrend meaning that we should break 1158 rather than move above 1267. If a break of 1180 occurs, that doesn't mean there couldn't be a move back to 1200-1250 prior to the actual move below 1158. The disappearing volume and end of the year seasonality will probably keep us in this range until the new year where the volume will be substantial enough to break through the range. The only strategies that I think make sense for the first half of 2012 are a hedged strategy or an all out bearish strategy depending on your risk profile. An all out bullish strategy for the first half of the year seems extremely risky so if you have to be bullish then be hedged.

Tuesday Update

2011-12-13T22:23:00.000-08:00

My system moved lower to +525. The bears are struggling to move the market down which isn't a surprise due to the seasonality factors at work. There is huge option interest at 1200 and 1250 so we probably will have a hard time breaking this range for the rest of the week. Only 12 trading days left for 2011...

Fed Eve

2011-12-12T22:18:00.000-08:00

My system moved higher on Friday to +775 and back lower today to +675. We are just zig-zagging and waiting for the last major economic event of the year with the Fed decision tomorrow. Volume has dropped off a cliff and except for options expiration day at the end of the week, it will likely continue to deteriorate. I will be making my last post for the year sometime next week and taking the rest of the year off.

Thursday Update

2011-12-08T22:42:00.001-08:00

My system moved lower to +700. The market went with the sell the news reaction today. The bulls now have to prove that the move yesterday to 1267 was not a failed re-test. It seems a little too obvious with the failure at the 200 day SMA and the down trendline from the July high but then you look at both Brazil and the UK failing at their 200 day SMAs and you have to wonder if the global bear market is re-asserting itself. The EU summit news is out and Britain looks like the smartest one in the room. The bulls will need some kind of reversal here to prevent the bears from taking over. Any noteworthy decline tomorrow could mean a surprise bearish ending to the year unless the Fed can pull something (QE3) out of their hat next week. My original date range for the bear market rally top was November 23rd-December 15th and if yesterday's high is proven to be a failed re-test, this would fit nicely time-wise.

ECB Eve

2011-12-07T22:05:00.000-08:00

My system moved higher to just under +800. Tough to say if we get a sell the news reaction tomorrow after the ECB cuts rates or if we break the down trendline from the July 7th high as well as the 200 day SMA and move higher. Time will tell...

Tuesday Update

2011-12-06T22:27:00.000-08:00

My system moved higher to +650 today. I'm still thinking there is a decent chance we will see some sort of euphoric move higher above 1292 but it's tough to say where the move will end except to state the obvious that it won't go above 1370. If we do get this euphoric move higher, I will be shorting once the market runs out of steam as a move under 1158 would be in store in the first quarter of 2012. Tomorrow is the last day to trade before the ECB cuts rates and possibly makes some other big moves in the chess game...

Monday Update

2011-12-05T22:33:00.000-08:00

My system moved higher to +200 on Friday and moved higher to +450 today. We were at -875 a week ago and now at +450 today, very sharp moves indeed. The S&P 500 opened 2011 at 1257.62 and now on December 5 it closed at 1257.08. So, with only 18 trading days left in 2011 the market really has gone almost exactly nowhere. Of course, inflation-adjusted returns would be negative. In the market top of 2007, the S&P 500 opened up 2007 at 1418 and closed 2007 at 1468. In 2009, the market opened at 902 and closed at 1115. So, many people seem to forget that 2008 was the only down year during that cyclical bear market but what a down year it was. I think 2012 will be the 2008 of this cyclical bear market. However, the bear move is likely to be in the first half of the year. In the short-term, we may get a pullback as the market readies for the big ECB decision Thursday morning and then the summit on Friday. It is hard to tell if we are done probing the upside but I'll make a guess and say we're not. There is still 18 days to do some zig-zagging but I'm not expecting anything that will move the market too much in any one direction. The wild card is the Fed meeting next week and we'll see if they try to goose the market into the end of the year. The major downtrend has been extinguished and won't be re-ignited until 1170 is hit although this is a rising level.

The Long Term Optimist

2011-12-04T12:26:00.000-08:00

This post is dedicated to the long term optimist. Someone like Warren Buffett who believes America will always triumph and will continue to play a crucial part in the global economy for decades to come. This post will also be more useful for those investors that are 50 or under and this post is not for those investors who believe America has entered a Japanese style deflation even though that scenario has credence. With that disclaimer, let's talk about the spreadsheet above. In this spreadsheet, I have used the Dow Industrials because the time series is longer and the data is accurate. I think the Dow Industrials is an inferior index but it's what we have to best analyze data from over 100 years ago. This spreadsheet is built for a buy and hold strategy and so I have used a simple price oscillator that basically allows the investor to accumulate stock when prices are low. Most people mistakenly think that you buy and hold during secular bull markets but that's only half right. You only hold during secular bull markets and you do the buying or accumulation in secular bear markets. That said, it is true that if you can accumulate stock during the latter stages of a secular bear market that this is the optimal time to accumulate.

The secular bear markets over the last 100 or so years as determined by the dates that my price oscillator indicated that the market should be accumulated are 1907-1923, 1930-1944, 1969-1982, and 2002-present. Based on past secular bear markets, we can already see that an end to the current secular bear market (or the last date that the market should be accumulated) can be expected as early as 2015 and as late as 2018. We are definitely past the halfway point of this secular bear market and could be in the latter stages. In the 1907-1923 secular bear, there were 7 accumulation periods. The Low and High columns are the lowest and highest prices that you could have accumulated the market in these accumulation periods. The Average Low and Average High columns are the average lowest price and average highest price up to and including that specific accumulation period for that specific secular bear market. I have highlighted the last average low and average high for each secular bear market except the current one which is yet to be determined. However, you can see that the average low and high does not change much as the secular bear market nears its end. Taking that into account, you can start to see that the average low and high that we will see at the end of the current secular bear market probably won't deviate too far from the current average low and high which is 7760.59 and 10507.57. The take home message is that accumulating in the ending range will guarantee significant returns in the subsequent secular bull market. However, it is impossible to know what the returns of the subsequent bull market will be or how long the secular bull market would last.

The 1930-1944 period had 4 accumulation periods, the 1969-1982 period had 9 accumulation periods, and the current period has had 3 accumulation periods. The time duration of accumulation periods during each secular bear shows that there were about 6 and a half years during the 1907-1923 period where an investor should have accumulated stock, just over 8 and a half years during the 1930-1944 period where an investor should have accumulated stock, about 7 years during the 1969-1982 period where an investor should have accumulated stock, and so far there are only about 2.75 years during the current period where an investor should have accumulated stock. It goes without saying that the current period has not given the long term investor nearly as much time to accumulate stock as it has in previous secular bear markets. There are probably another 4-7 years left in the current secular bear market and so we are likely to see another accumulation period or periods going forward but it will be interesting to see if we make up the time duration towards the end of the current period as was seen in the 1930-1944 secular bear market. In fact, the limited number of accumulation periods also is similar to the 1930-1944 secular bear market. I think most would agree that as bad as the current secular bear market has been, it does not rival the 1930-1944 period. Can you imagine trying to be a long term optimist in the 1930-1944 period? I think it would be far more challenging in that period to think that that there would be a 25 year secular bull market (1944-1969) in front of you.

This buy and hold strategy I have described is for those that have at least 30 years left to invest in equities. It is an insurance policy in case the apocalypse doesn't happen just as gold is an insurance policy for those in case the apocalypse does happen. All kidding aside, every portfolio should have some percentage allocated to the accumulation strategy (buy and hold) although we, of course, are not currently in an accumulation period as determined by my price oscillator but we should be at some time between now and 2018. This strategy is best suited for those 35 and under although this could be stretched to 50 and under due to increasing longevity of life in the American population. For those 50 and over, one can invest for their children or grandchildren who are 35 and under and are not investment savvy at this point in their lives.

Jobs Eve

2011-12-01T21:40:00.000-08:00

My system moved higher to -50 and both the S&P 100 and 400 went net positive in my system. If you would have told me last Tuesday when my system was around this area that we would go to

-900 and make a round trip back to -50 in 6 trading days, I would have said you were crazy. The magnitude of these moves within my system are a bit scary but I guess it's a representation of the extreme volatility right now. The downtrend from 1292 to 1158 will end if we hit 1269 but that doesn't mean to buy. It only means to not short until the downtrend reasserts itself. The market confirmed the downtrend at 1187 and if the downtrend ends, it will be due to the extraordinary circumstances of this week. We merely have to wait until the effect of the extraordinary circumstances peters out and the downtrend begins anew before shorting again. This may take a few weeks or may even take us into the end of the year. I continue to believe that it would be extremely unusual if 1074 was the bottom of the bear market.

Wednesday Update

2011-11-30T21:25:00.000-08:00

My system moved lower on Friday to -900, moved higher to -875 on Monday, moved higher to

-825 yesterday, and moved higher to -375 today. Well, it certainly was an interesting day to come back from vacation on. The market is always susceptible to intervention but the timing to correspond with the normal end of the month buying enabled the central bankers to get the most bang for their buck. 11 months are completed in 2011 and the S&P 500 has only fallen 11 points in all of that time as the market opened up this year at 1257. It actually isn't a surprise to me that the market is almost unchanged for the year but it would surprise me if we don't head down in the first half of 2012. With money managers chasing performance today and through the rest of the year, we could see the rally levitated for a few weeks before they close their books. If we hit 1272 now, that would end the downtrend and although investors should then be hedged for a break of 1292 the market can again be shorted on a break of 1170. The 10% scenario of breaking 1292 is the unlikely scenario but was always possible with further intervention and we will see if the central banks can get it up there. Sometimes it seems as if what the central banks and politicians are doing is so reckless and unbelievable that the world we are living in can't be the real world. Yet it is and this is happening, this is really happening. Is it different than what has happened in the past? Probably not but there are so many dynamic scenarios for where the bouncing ball eventually lands, that it is impossible to tell at the moment how severe the repercussions will be for a leadership structure that is trying to prevent its own collapse.

Thanksgiving Eve

2011-11-23T21:12:00.000-08:00

My system moved lower to -525, that is not a misprint. There's not much to add from yesterday except that EUR/USD is starting to crack which is the last asset class giving bulls some hope. Perhaps the bulls will get a bounce during the half day on Friday. I will be taking a couple of extra days off for the holiday and my next post will be next Wednesday. Have a great holiday...

Tuesday Update

2011-11-22T22:10:00.000-08:00

My system moved lower to -75. The last time my system was in net negative territory was October 12th. The S&P 500 went net negative in my system today and the S&P 100, 400, and 600 are all on the verge of going net negative. The futures are down more than 1% at the moment but that could easily change by the time the market opens. The point however is that the bulls have not even been able to manage a decent bounce as of yet and investors shouldn't be nonchalant since the continuation of the bear market was confirmed when we took out 1187. There is no sure thing in the market but that shifts the odds of taking out 1074 to 90% and of taking out 1292 to 10%. Any bounce in the market should face stiff resistance from sellers in the 1225-1250 area. The bulls still have EUR/USD in their corner as it has not cracked yet. For the 10% scenario to occur with a move to 1292, I would imagine another managed short squeeze would need to occur and the bulls do have traditional seasonal winds in their favor. However, the long term consequences of such a short squeeze would be potentially dire and I will save that for another time in case this long shot scenario does happen.

Monday Update

2011-11-21T21:32:00.000-08:00

My system moved lower on Friday to +600 and moved lower to +225 today. My Bank/Tech index went net negative within my system on Friday and the Nasdaq 100 went net negative within my system today. That is not a good sign for the bulls as tech tends to lead. The end of the uptrend occurred at the 1187 level today and the market laid down its cards. So what does that mean? My preferred scenario of a 3-5 day surge is out and the less likely scenario of a 2-4% move down occurred instead. I think a bounce can be expected although by no means guaranteed in the very short-term but only a move to 1280 at this point would reverse the major trend back to up but I don't even think the bulls can get to the 1260-1265 level which should be major resistance. At best, we could bounce to the 1225-1250 level. If we do get a bounce, it will be a gift for the shorts but all short positions should be established prior to 1150 being broken as we are ultimately heading for a break of 1074. I am still surprised about the time length of the bear market rally. It didn't seem long enough but I can't argue with the market which has said that it was long enough. The one bright spot for the bulls is that EUR/USD has not completely broken down yet but that could be coming as other Dollar pairs have confirmed the down move in equities. If equities bounce, EUR/USD will likely delay a down move until the bounce has run its course.

Thursday Update

2011-11-17T21:39:00.000-08:00

My system moved lower to +750. The dip below 1215 occurred which fulfills the first part of the two scenarios that I was looking at. Now we are nearing the moment of truth as to which one will play out. First, regarding the scenario that I think is less likely but is possible and that is that the market is headed down right now. For this scenario to have more credence, we should see a 2-4% down day as soon as tomorrow and hit the 1183 level which would confirm that the bear market rally is over. Second, regarding the scenario that I think is more likely and that is that we stabilize around these levels and then surge for 3-5 days. We could stabilize for 1-2 more days and test today's lows and maybe make minor new lows but the stop level for this scenario is now raised to 1183. If this decline has been solely because of op ex, we will know soon enough.

Wednesday Update

2011-11-16T22:09:00.000-08:00

My system moved lower to +925 which is a sell signal. My preferred scenario of a dip near or under 1215 before a surge would mean a likely double top in my system which is fairly common. If we were to hit 1180 now then this sell signal is likely legitimate but I still think this is the less likely scenario. Not much to add today except for me to say to please excuse my error from yesterday regarding the Spanish and French bond auctions which are actually in a few hours. Will one or both of these auctions provide the catalyst to get to the short-term low? We will know soon enough but a low risk trade is to buy a break of 1215 with a stop at 1180.

Tuesday Update

2011-11-15T22:19:00.000-08:00

My system flatlined today at the +1000 level which is something I'm not sure I've seen before in my system. Anyways, overnight we have some French and Spanish bond auctions that could give me the dip I was looking for towards or below 1215 before a final surge. The time window for this dip is within the next 48 hours and preferably it would happen tomorrow. If the futures hold, the dip might come right on time. Currencies have not bounced like equities and are almost near the lows of early October. Even though I've been heavily long the Dollar for some time now, I expect these currencies paired against the Dollar to surge along with equities after this dip is over so the Dollar should retreat once this dip is done.

Monday Update

2011-11-14T20:38:00.000-08:00

My system flatlined on Friday and today moved lower to exactly +1000. A move below +1000 will be a sell signal but there's a caveat. Last week I talked about my preferred scenario being a final surge after a break below 1215. You are probably wondering if Friday's move was the surge I was talking about and it is not. So, we are left with one of two scenarios. A possible but less likely scenario is a break in the market now and we are going to break 1215 and keep on going. I think this is possible but it's not my favorite scenario because I think there is still a time window for one more up move. Also, I think this scenario would have too many investors shorting the break and I don't think the market would reward that. Still, it's important to be aware of the possibility and to have the appropriate strategy in place. My preferred scenario continues to be one more dip downwards preferably to take out 1215 before reversing higher in a big 3-5 day surge that could possibly hit the 1300-1310 area. The shorts would get killed and the bulls buying on a break of 1292 would get trapped and the psychology of this type of move should result in less investors trying to short on a subsequent move back down to 1200 which would mean a continued move to under 1074. So what would cause this surge? Who knows? I do know that the so-called super committee has very low expectations in the marketplace including myself but there's always the possibility they could surprise the market. I would be shocked by that as would everyone else. Bottom line, into the Thanksgiving holiday next week I am expecting an overall bullish market that should top out the rally that began from the 1074 low but if we hit 1175 now now then we already topped and are going down sooner than I thought.

Thursday Update

2011-11-10T22:29:00.000-08:00

My system moved lower to +1050 today. Yesterday, I talked about the low probability of the market rolling over right now. However, after doing quite a bit of analysis since then I have come to the conclusion that it's probably more possible than I was allowing. That said, my preferred scenario is still one more surge which I think would be the right psychological market move to throw both bulls and bears off for the subsequent decline. I'm not sure if the 1226 low is enough before the surge but I would have preferred a break of 1215 prior to it occurring. Once the bear market rally is over we will break 1074.

Wednesday Update

2011-11-09T20:36:00.000-08:00

My system moved lower to +1150. Just when I thought my favored scenario was about to be extinguished, the market has its dramatic reversal. I don't know what is up with Walmart and that $60 level but it's fairly crazy that the sellers manage to keep on winning there. Anyways, in my opinion, this bear market rally has not been long enough in time to say it's over. That said, there is a very low probability that the bear market rally is over but the level where that would be confirmed will be at just under 1165 tomorrow. However, until that happens my favored scenario is a move near or under 1215 which will trap some late bears before a surge back to near or above 1292 which should finish off the rally. The timing for this top would likely be Thanksgiving week. When looking at EUR/USD, it clearly has underperformed the S&P 500 for good reason but it will likely end up surging if equities also go through a surge next week after a short-term low is made in the next few days. How far it surges after it finds a low will be the question next week if this scenario continues to unfold...

Tuesday Update

2011-11-08T21:28:00.000-08:00

My system moved a bit higher to +1300. Barring some dramatic reversal tomorrow, the market looks like it may take out my favored scenario and move higher. The one caveat is that EUR/USD and several European indices are diverging on a relative strength basis with the S&P 500 so I would expect one to catch up with the others. Whether that means a surge in European asset markets or a fall in U.S. markets we will just have to wait and see. Of note, Walmart hit $58.82 in Dec. 1999, $59.99 in Sept. 2008, and today hit $59.40. It has been 12 years and Walmart still has not touched $60 in what is easily one of the longest consolidation periods in the stock market today. Of course, these first two attempts at $60 were both a month before big breaks in the overall market. Will the same thing happen again or was that merely a coincidence? Or will Walmart break out for real this time which I have to imagine would lead to the $80-90 area over the next several years.

Monday Update

2011-11-07T22:02:00.000-08:00

My system flatlined both on Friday and today. And that's representative of where we are as we continue to be caught in this tight 1215-1275 zone without moving much. My favored scenario would be a move towards 1215 and even undercutting it. This would trap the bears. Then a subsequent surge to above 1292 where the bulls would be trapped. That would cap the bear market rally. Is this too obvious a scenario? Probably but we will know soon enough as any continued gains will quickly kill this scenario.

Jobs Eve

2011-11-03T21:16:00.000-07:00

My system flatlined today. The potential scenario down to the 1170-1190 area that I mentioned yesterday is off the table after today's gains. Now we need to see the market reaction to the jobs report tomorrow. If the market is unable to advance much past today's levels then we will continue the correction phase and likely move under 1215 in the next 6-10 days. However, if we do have a similar advance tomorrow and move towards 1292 then that would open up some more bullish scenarios. The EUR/USD as suspected has moved bullishly by moving higher after an interest rate cut. If the EUR/USD is going to continue its bullish ways then I imagine equities would veer towards one of the bullish options. If the EUR/USD is unable to continue its advance off of the 1.36 level and instead heads back towards 1.36, then equities should veer towards the continuing correction scenario. Unfortunately, we just have to wait to see what plays out tomorrow and see how many times the referendum is on and off again. Borderline ridiculous...

Wednesday Update

2011-11-02T21:52:00.000-07:00

My system moved lower to +1275. We got the bounce towards 1250 today but the immediate short-term is less clear. The extremes are safe for a few days meaning we aren't going above 1292 or below 1145 (which is now where the bear market rally is confirmed over). There is one scenario where we could get a low down in the 1170-1190 area in the next 2-3 days. I will be attempting to go long at 1190 if we get there. The November 23rd date in regards to the Super Committee and the December 4th Greek referendum date are conveniently right in the timeframe of where the rally should end and more specifically the window is Nov. 23rd to Dec. 15th. If this week's low of 1.36 can hold in EUR/USD, then we might oddly see another substantial rally in the Euro towards the 1.45 level that should top around this same timeframe. Of course, the ECB decision tomorrow will determine if this is even a possibility depending on the reaction of the Euro.

Fed Eve

2011-11-01T22:33:00.000-07:00

My system moved lower to +1350 today. Today was important because the ability of the bears to prevent the 1310 area from being reached right away has given a lot of heft to the hypothesis that the rally from 1074 is indeed a bear market rally, although the rally should not be over yet. In terms of the very short-term, it's a tough call but I was expecting more of a bounce from the bulls so maybe we get some kind of hard bounce off a lower correction low tomorrow. Or maybe today we had a low where we will see a bounce now towards 1250 but with the Fed statement tomorrow I'm not willing to give either scenario the upper hand. I am going to try the long side if we get down to the 1190-1195 area. A move to 1140 right now would mean the bear market rally is over but I am not expecting that right now and this number will change as the rally continues.

Monday Update

2011-10-31T22:28:00.000-07:00

My system moved higher to +1475 on Friday and moved slightly lower to +1450 today. These are nosebleed levels in my system. We'll see what the ISM does to the market tomorrow. Then we have the Fed statement on Wednesday and jobs report on Friday. There should be strong support in the 1200-1220 area in case the ISM is ugly and we get follow through to the downside tomorrow. I would cover my recent short there. If the correction has begun, then I would expect it to last for roughly two weeks before a move back up towards the 1300 level for one more test. If the market can reverse to above 1292 right away instead, then if nothing else I will be impressed with the bulls.

Thursday Update

2011-10-27T21:37:00.000-07:00

My system moved higher to +1400 today. It goes without saying that the rally we've all seen this month, especially in the context of where the trend had been, is an unprecedented one. New highs in the S&P 500 to at least the 1385-1400 level are in store in the next 6 months if we get up to the 1310-1313 area preferably tomorrow or by Monday. Can we get to the 1310-1313 area by tomorrow or Monday? Anything is possible but the bulls need to prove themselves more than ever right now as my 1260-1290 target has been reached and just barely breached intraday and my Dollar correction target was reached at 74.75. I did short the market at the close and put my stop at 1300, a very low-risk trade and a test for the bulls. If we do get the bull scenario and get up to the 1310-1313 area, then we will probably hold up in the 1300-1320 area until the jobs report next week before a pullback that should take us back to 1250 where the market should be bought. If we get the bear scenario, then a short-term top is imminent and we will have a pullback that should last a couple of weeks before one final lunge towards 1300. One thing is for certain, the bears are being pushed to the extreme edge of their positions and a continued push by the bulls will only delay a worse bear market starting in the first half of next year. Some crucial trading ahead over the next few days...

Wednesday Update

2011-10-26T22:34:00.000-07:00

My system moved higher to +1200. It's not a big surprise that the decline was bought and we are moving towards the rally highs again. This leg of the rally will likely top in the next 1-3 days and then we will head back to the 1200-1220 area which should take around 2 weeks or so before another leg higher to test and possibly break whatever high is reached in the next 1-3 days. The 1260-1290 resistance is strong and is a very low-risk area to short for the upcoming correction.

Tuesday Update

2011-10-25T22:22:00.000-07:00

My system moved slightly higher to just above +1100. The correction may or may not have begun today but there is still so much time left in this rally cycle that any downturn will likely be bought for another test at the 1256 level. Europe's decision tomorrow and GDP on Thursday along with end of the month buying will make it an interesting couple of days ahead but it will have little effect on anything but the short-term.

Monday Update

2011-10-24T21:48:00.000-07:00

My system moved higher to +825 on Friday and moved higher to +1075 which is an overbought buy signal. If we are still in a bear market, then this would be the first time a bear market rally has been able to surpass +1000 in my system. It is amazing that we were near -1500 earlier this month and now we are above +1000. Although it looks and feels like an epic short squeeze right to the 61.8% retracement of the down leg that started at the beginning of May at 1257, the bears will have to show that they are for real. That said, the bulls only have a few days left of this leg maybe until the end of the week and then we should see a turn towards the 1200-1220 area before another move to test the upcoming high this week. The resistance in the 1260-1290 area is strong and I wouldn't expect stocks to easily get through here. Personally, I think this is a bear market rally that will peter out in late November to mid-December. If stocks did manage to get above 1310 we would likely get above 1370 briefly but then the consequences of this market move would be a terrible bear market afterwards. I think if the Fed pulls the QE3 lever, this would have a chance of occurring but boy oh boy the consequences...

Friday Morning Update

2011-10-21T06:24:00.000-07:00

My system moved higher to +675 yesterday. Europe has managed to stall again without market repercussions. So my favored scenario at the moment is that there may be possibly be another week of upside to the 1250-1275 level before a pullback. From the bottom of that pullback we should get another move above the upcoming high and then I would expect the rally to be over. A move back to 1170 now would negate this scenario. Only a move under 1110 would change the direction of the market to the downside. I thought this up cycle would last around 45 days but because of the large rally in the beginning of the cycle, it could come in closer to 35 days and we are only 13 days in. The elephant in the room is China which continues to hit new lows, not a good sign.

Wednesday Update

2011-10-19T22:34:00.000-07:00

My system flatlined today. Not much to add for today as we'll see if the market reverses its losses again or makes its way under 1200.

Tuesday Update

2011-10-18T22:25:00.000-07:00

My system moved higher to +625. Yesterday, I still had a notion that we would get a pullback and have an orderly rally but that's pretty much out the window with my system where it is. Blame it on options expiration or the big upcoming Sunday in Europe or the false news stories at the end of the day or the crazy robot algos. The point is that the market is compacting its gains into a few days when it should have taken weeks. That has me "concerned" with what is going to take place next. With my system at +625, the market is not conforming to my previously favored scenario of a pullback to the 1150-1170 area. A move to +1000 in my system would be an indication that the bear market ended or else it would be the first time that my system got that high while in a bear market and I guess there is a first time for everything as well. A continued bullish move now without a pullback up to the 1275-1285 level would probably mean months of consolidation before the bulls make an attempt for the May highs. On the bearish side, both commodities and the Dollar look very close to how they looked right before Lehman failed. That should have bulls worried with the Greek default possibly happening on Sunday. One thing is for sure and that is the debt is not going to go away. The markets very well may buy the kick the can down the road argument once again but the debt will still be there in one form or another as it gets passed from entity to entity. One only has to look at Japan twenty years later as bad bank loans have passed through enough channels to become a massive public debt issue where debt as a percentage of GDP is well over 200%. The U.S. wants to inflate away the debt problem and maybe it will be successful. If it is not, I shudder to think about the next ten or even twenty years in this country as it relates to asset markets. Gold, which is in an obvious secular bull market and I have said as much for years, will ultimately be a winner in this debacle but I would like to see it correct towards the 1150-1300 area first.

Monday Update

2011-10-17T21:43:00.000-07:00

My system moved higher to +425 on Friday and slightly lower to +400 today. We got the brief move above 1220 before today's correction. The 50 day SMA and 200 bar hourly SMA are both at 1172 and it would be nice to see a test now of that level. I would look for a drop below there somewhere between 1150-1170 where it should find support. This is a good area to test the strength of the bullish move and buy equities with stops under 1100 but my guess is there will be another leg higher to the 1260-1290 area.

Thursday Update

2011-10-13T22:24:00.000-07:00

My system moved higher to just under +200 which is the first time we have been in net positive territory since late July. The only index in my system still in net negative territory is the S&P 400 but that should go net positive very soon. The pullback to 1190 today was not enough of a correction. If we get a move higher now above 1220 then it probably won't go very far until we have a more substantial correction. A move lower now towards the 1170 level should provide a correction low tomorrow or Monday.

Wednesday Update

2011-10-12T22:40:00.000-07:00

My system moved higher to -50. I may sound like a broken record but again we wait for a pullback and I am raising my support level to the 1130-1170 area. I would be shocked if there isn't a pullback to at least 1170.

Tuesday Update

2011-10-11T21:46:00.000-07:00

My system moved higher to -450. The market should get a pullback very soon here and this will be the buying opportunity for another move higher.

Monday Update

2011-10-10T20:00:00.000-07:00

My system moved higher to -1025 on Friday and then higher to -675 today which is a buy signal in my system. The Nasdaq 100 moved into net positive territory in my system as well. As suspected, the final confirmations of the uptrend have been made. We are now looking at a likely pullback beginning as soon as tomorrow and probably lasting 3-5 days with an intraday dip possibly in the 1130-1160 area. Then I would expect a move towards 1225. At that point we will need to address if the rally will be able to carry into the Thanksgiving timeframe and towards the 1260-1290 area. In order for this rally to be stopped, the bears would need to drive the market under 1100 which doesn't seem likely from the technical signals I am looking at. That said, I would be surprised if 1074 was the bear market low and once this multi-week rally is over, we should head below there.

Thursday Update

2011-10-06T22:35:00.000-07:00

My system moved sharply higher to -1175 and this was the kind of momentum uptick I was talking about yesterday. Most technical signs I look at point to 1074 as a likely intermediate-term bottom. The last two things for confirmation of the bottom are a move above -1000 in my system and if we hit the 1190 level. We could first get a retracement down to the 1110-1140 area before going up to hit the 1190 level. Since all of that wouldn't happen in a single day, the 1190 level it needs to hit would be lower than 1190 by the time it gets up there, probably in the 1175-1189 range. If there is no retracement and we get up to 1190 tomorrow, there should be a retracement afterwards to at least the 1150-1170 level. Ultimately, if the rally is for real, I am looking for a move to the 1260-1290 area over the next couple of months. If the bears manage to push the market under 1100 then the market may not have put in an intermediate-term bottom. I do not think 1074 was the bear market low and we should break that either now or in the 1st quarter of 2012.

Wednesday Update

2011-10-05T22:10:00.000-07:00

My system moved slightly higher to -1350. While marginally positive, I would expect a larger momentum uptick if an intermediate term rally is starting. It is true that this momentum strength could show up several days after the bottom. The bulls now need to hit 1194 to confirm 1074 as the intermediate-term bottom. The market should retrace after that and that will be the low-risk buying opportunity. However, the likelihood of hitting that 1194 tomorrow is unlikely which means we can sit and watch another day. The trifecta of the BOE and ECB decisions tomorrow along with the jobs report on Friday should provide some more volatility or at least I would be surprised if there wasn't any.

Tuesday Update

2011-10-04T22:02:00.000-07:00

My system flatlined today. Although the bulls seemingly got their reversal today, there was neither a move above 1139 nor an intraday touch of the 1025-1050 area. The 1139 target only applied to today's trading and the fact that we didn't hit the 1025-1050 area either makes tomorrow a day of sitting on your hands. There are no moves to make tomorrow other than to watch what the market does with the late day rally. An intermediate term bottom would be confirmed if we hit 1197 but I highly doubt the market is going to hit that tomorrow which makes it safe to watch. That 1197 number is a calculation that has come down from 1210, 1206, etc. and will continue to drop every day until it is hit. I also highly doubt that 1074 is the bear market low and that will break whether it's now or later.

Monday Update

2011-10-03T22:41:00.000-07:00

My system moved lower to -1200 on Friday and moved lower to -1375 today. We have undercut the 1101 low and now there is either going to be an imminent rally or imminent collapse. My preferred scenario is a rally into December and I will be buying either on a break of yesterday's high at 1139 or if we move into the 1025-1050 area intraday I will give longs a shot with a stop under 1010. If we do collapse, my short EUR/USD position will likely benefit but I would actually rather not have this happen now if it were my decision. If the bulls don't get some kind of reversal tomorrow, it probably doesn't bode well for the rest of the 4th quarter.

Thursday Update

2011-09-29T22:12:00.000-07:00

My system flatlined today. I only have a few scenarios I am taking seriously right now. The first is that we undercut the 1101 low and have a false break and then go on an intermediate term rally that will probably top around December. The second is that we could go down a little further to at least test 1114 but then start this intermediate term rally prior to going under 1101. I do not think 1101 is the low of the bear market so that should be broken in 2012 if it doesn't get broken now. The third and least likely scenario is a complete collapse in the market akin to October 2008. A move to 1206 will be sufficient to confirm the intermediate term low is in and then we should get a retrace back into 1150-1200 that can be bought.

Wednesday Update

2011-09-28T22:25:00.000-07:00

My system moved lower to -1050 thus averting a buy signal at least for one more day. I suspect the next few days will have some hard-to-understand trading as the 3rd quarter ends and the 4th quarter begins. I'm still looking for my preferred scenario of an undercut of 1101 where there is going to be a decision made in the market but a move to 1210 first would be enough to say 1114 was a successful test for the time being. The next 2-5 days should be where the decision is made in the market.

Tuesday Update

2011-09-27T22:08:00.000-07:00

My system moved higher to -1000 and one more up day will produce yet another buy signal. For a 30 day period, we are currently tied at 6 system signals with the quant breakdown in August 2007. One more signal would make this current 30 day period the choppiest since my system began. If the bulls hit 1210, we will almost certainly get a retracement back into 1150-1200 but I would be a buyer there for a 4th quarter rally back into the 1260-1290 area. That said, I do not think 1101 is the low and we will need to eventually go back there. My preferred scenario would be a move lower to at least test 1114 and possibly undercut the 1101 low before an intermediate term rally but we'll see how the rest of the week plays out.

Monday Update

2011-09-26T22:48:00.000-07:00

My system moved lower on Friday to -1050 for an oversold sell signal and then flatlined today. The potential is there for a positive divergence if we git a dip under 1101 which would lead to an intermediate term rally. But this is just one scenario. The bulls would need a move to 1210 right now to convince me that 1114 was the low of this current down move. The bears still have the benefit of the doubt but would need to start moving lower in the next two days in order for 1114 to be tested. Bottom line, I'm expecting the volatility to continue this week.

Thursday Update

2011-09-22T22:18:00.000-07:00

My system moved lower to -950 with the Nasdaq 100 going back into net negative territory but just barely. We may get a bounce but it doesn't feel like 1114 is the low of this move. Still, the volatility warrants a hedged strategy in my opinion. It's very unlikely we are going to stay between 1100-1200 for the rest of the year and buying both calls and puts that take advantage of that likelihood that we move out of this range is the way I am playing the equity side of things. The market wants a Greek default and would eventually rally on that news. The market looks eerily similar to where we were near the Bear Stearns bottom in March, 2008. If Greece is equivalent to Bear Stearns then who is going to play the role of Lehman? Spain or Italy?

Wednesday Update

2011-09-21T20:51:00.000-07:00

My system moved lower to -700. The correlation of strong Dollar and weak equities went into another gear today throwing cold water on my theory that these would start moving in the same direction. The one bull scenario that had the potential of reaching new bull highs in Q1 of 2012 took a big blow today and it would take a large reversal to even begin to consider this as still plausible. The bulls seemed to have sentiment and the semis in their corner but it's not enough apparently. A move below 1150 brings the 1025-1050 area back into play. All hedges or outright shorts after a break of 1150 should be made prior to a move below 1135. A reversal above today's high would be enough for me to go significantly long.

Fed Eve

2011-09-20T22:44:00.000-07:00

My system flatlined which is very common the day before a Fed decision. I am not going to waste time speculating on what they may or may not do so I'll keep it short tonight and let tomorrow play itself out.

Monday Update

2011-09-19T22:10:00.000-07:00

My system moved higher to -525 on Friday and moved higher to -500 today. The Nasdaq 100 turned net positive in my system on Friday. The market looks like it is in a holding pattern until the Fed decision. The market also looks like it still is adhering to the strong Dollar, weak equities correlation. But when you look again at where both were since the beginning of September, it becomes clear that equities are not very far from where they were then but the Dollar is up 4-5%. Either something is changing with the well known correlation or we are going to have a fairly big sell-off in the Dollar to get back in line with equities or there is going to be a big drop in equities to get back in line with the Dollar strength we have seen. I am curious to see how both the Dollar and equities play out after the Fed decision. A correlation shift could really trip up the majority of investors that are not positioned for it.

Thursday Update

2011-09-15T23:10:00.000-07:00

My system moved higher to -750 and the momentum looks strong. The Nasdaq 100 just missed going net positive in my system but could do so tomorrow. I bought equities at the close thinking that the final print would be above 1210 but it fell just short. I have limit orders to buy at 1175 and 1200 with my stop under Tuesday's low of 1157. If the rally is for real, then the next question is where is it going. The best case scenario is that we will move higher over the next month with some hesitation in the 1250-1270 breakdown area before an attempt to crack the 200 day SMA around the 1280-1285 level. Several months of consolidation later and we may attempt the bull market highs. I can't give you the probability of this scenario, only that it is possible at the moment and the next month will dictate whether this will play out or not. I do feel strongly that if this scenario played out, that we will top in the first quarter of 2012 and a cyclical bear market will follow with no question in my mind that we will break the recent 1101 low. For the bulls, this is I believe the only scenario for them. All other scenarios are variations of the strength of this rally but in the context of still being in a bear market with the best case of these bear market scenarios failing at the 200 day SMA before another dive. This one aforementioned bull scenario is probably predicated on some type of QE3 or other monetary policy trick to be announced next week but is ultimately doomed to fail in my opinion even if a rally occurs in the intermediate-term. If we were in a normal economy, the S&P 500 would probably be over 2,000 by now with ZIRP and the other monetary policy tools that have been used. The question people should be asking is why the stock market is at a measly 1209 with interest rates and liquidity at levels that equity investors would have salivated at 10-20 years ago and likely would have had investors leveraging to the hilt to be a part of. For years, the warning of too much debt fell on deaf ears but here we are now in a different type of economy. Bernanke is doing everything he can to prop up the market but the deleveraging force in the private sector is powerful and he is hoping upon hope that his tools will be able to weaken the Dollar so that the debt is inflated away. I still don't know how this story turns out. The bottom in the Dollar in early 2008 just after the onset of the financial crisis has yet to be broken despite Bernanke's attempts to do so. Perhaps he will be successful this time around with whatever he comes out with next week. If he is not, then the Dollar could rally substantially. In a normal economy, the Dollar would be far lower and equities far higher taking into account the tools that have been used. However, they are not and it has been too many years now for this to be anything other than solid evidence of an economy that is not behaving normally. The housing market topped in 2005 (some argue 2006) and it has now been 6 years without a bottom which is far longer than one would expect in a bubble pop. How long it takes to reach bottom will directly affect Bernanke's monetary policy success and how long we will be dealing with this abnormal economy.

Wednesday Update

2011-09-14T22:53:00.000-07:00

My system moved higher to -950 generating the third buy signal this month and fifth signal overall in 9 trading days. Both previous buy signals lasted one day as the bears came out the next day to push my system back under -1000. We'll see how it turns out this time but any up day tomorrow will break that pattern. The market seemingly has the appearance of bulls walking into a trap but price action can't be dismissed. I am looking to buy if the S&P hits 1210 but any break of today's low at 1162 would cancel the type of rally I would be expecting and I would be done on the long side for the moment. I also want to mention that if the market does have the type of rally I would be expecting on a touch of 1210 it would be very bullish over the next 6 months and very bearish over the long-term. More on that later if we end up going that route. It is interesting that even though the Dollar index moved a bit lower, it did not move nearly as far down as you think it would when equities have been up as much as they have over the last three days. In fact, the Aussie, Kiwi, and Pound are all near their recent lows against the Dollar while the Loonie is a bit more neutral. The Euro has really been the only one to make any headway in terms of correcting the Dollar strength and it hasn't been excessive headway by any means. Could the market be in the process of changing the correlation, at least for awhile, into the seemingly paradoxical strong Dollar and strong equities motif? Am I actually hallucinating to even evoke such a disparate thought? These questions will have to remain unanswered right now but it is notable that such "risk on" currencies like the Aussie and Kiwi are not rallying against the Dollar when they should be if everything was peachy and we were about to embark on an equity rally. Then we have the semis that topped early in February and fell over 30% into August and are now clearly breaking higher encouraging the bulls in their nascent campaign. Is this all an elaborate facade? Perhaps, but you have probably noticed that I currently have more questions than answers. However, I will tell you what is not an elaborate facade and that is the insolvency of Greece. It's clear as day that a default will eventually take place. One has to wonder about equities not reacting negatively to the absurd teleconference of Merkel, etc. today which came out with nothing new. It could be that investors are so negatively positioned for the obvious default, that it won't take much buying to get a rally going. That's the only explanation I can come up with.

Tuesday Update

2011-09-13T23:11:00.000-07:00

My system moved higher to -1025. We are right at that point now where the market has to make a decision on which way it wants to head. The semis and airlines had nice moves today with the former moving above the congestion zone and either leading the market or squeezing the shorts one last time before a violent move in the opposite direction. The 60 minute chart of the S&P is right up against its 200 bar SMA with other notable MAs converging. Any up move will likely cause another buy signal in my system although I would still wait for the 1210 area to be hit before buying. A move below 1135 should send us under 1100. I do have the sense that the bears have to show up tomorrow or they may have ceded control back to the bulls. Although Europe has been front and center, the retail sales data tomorrow morning is a dark horse candidate for a catalyst in either direction. Should be an interesting day. If the market is able to do nothing tomorrow, I will be surprised.

Monday Update

2011-09-12T22:03:00.000-07:00

My system moved barely lower to -1100. The short squeeze in the last hour of trading was interesting only because it is very rare for the market to be down by as much as it was going into the last hour and be able to pull out a decent gain. We'll know fairly soon if this was a one-off that was as successful as it was only because of options expiration this week. If we somehow move above 1210 I will be buying with both hands but a move below the 1136 low looks destined to break 1100. This is a tough whipsaw market at the moment but we are nearing the end game of this move when the investors on the right side will be able to harvest their profits. The bears have done enough work to the downside to give them the benefit of the doubt and the onus is on the bulls to prove that the next move for the market is above 1230 and not below 1100.

Weekend Update

2011-09-11T15:49:00.000-07:00

My system moved lower to -1075 on Friday generating an oversold sell signal. There have now been 4 signals in my system in the last 6 trading days. This cluster of signals is a rare occurrence and has only happened a couple of times in the past. Unfortunately, we can't glean much from those occurrences other than the last signal prevails in the short-term for about 1-2 weeks. The bears have clearly shown that they are not done with equities but they can't let go of the momentum here as they should be able to break the 1140 and then 1120 and then 1100 levels this week. I'm looking for an intermediate-term bottom in the 1000-1050 area. We have the big Fed meeting next week so it would make sense if equities deteriorated into that decision so as to force their hand. If the bulls somehow managed to send the market above 1210, then that would generate yet another buy signal in my system and make the prospects of a continued move higher very likely. But, the bears had a big victory on Friday and I'm not so sure they are going to give it up this time. The strong Dollar and weak equities trade is still paying out dividends which is somewhat surprising as it seems way too obvious and I am looking for the day these will move in the same direction which is clearly not here yet.

Thursday Update

2011-09-08T22:33:00.000-07:00

My system moved higher to -975 generating a buy signal which is the second one in the last 5 trading days. This is an interesting divergence with price moving lower and my system moving higher but again the proof is in the pudding or rather the price. The bears managed to make today a meaningless day for the market but they will need follow through immediately as we continue to reside in this gray zone of roughly 1150-1210 in the S&P 500. I would have to guess that a move outside of this range should be the true direction so if we go above 1210 we should continue to move higher and below 1150 we should continue to move lower. The Dollar index touched its 200 day SMA for the first time since September 2010 which it fell through shortly after the Jackson Hole speech a little more than a year ago. The Dollar index didn't move in the July-August drop in equities which was unusual but now it's moving. The fact that the Dollar index acted so strangely should be at the very least an alert that someone has potentially "pulled the lever" and scrambled the correlations. If we see equities and the Dollar soon moving in the same direction, then we can hypothesize that the lever was indeed pulled and the game has changed.

Wednesday Update

2011-09-07T20:59:00.000-07:00

My system moved lower last Friday to -1025 which is an oversold sell signal and then moved lower yesterday to -1075. Today, it moved higher to -1000 and any movement higher in my system tomorrow will generate a buy signal and this one may be legitimate. There was a successful test yesterday of the 1120-1150 area and now we are in a gray area although the bulls have reason to be excited. With BOE, ECB, Bernanke, and Obama tomorrow it is possible that whoever wins tomorrow whether it be bear or bull will be the winner in the intermediate term. The bears need an immediate reversal and need to take out 1165 or else we should easily go above 1230. If the bulls manage that, there is a chance that we test the 1350-1370 level in the next 6 months or so and possibly make a new high before entering a cyclical bear that will take us down to test the 666 low from 2009. That is one of the two scenarios I'm looking at if we get above 1230, the second one being less bullish but I won't talk about that further unless we do get above 1230. If the bulls take this market higher in the intermediate term, they are dooming themselves to a worse fate in the longer term. My suspicion is that QE3 would be the reason for a market advance over the next 6 months or so. What is interesting is that there is a possibility that the Dollar will move higher with stocks. I'm a little iffy on this scenario about whether it makes sense or how it would work especially if QE3 is the catalyst for stocks to move higher. I have theories about why this correlation would occur but until I see more evidence of it, I'll leave it there as something to look for if stocks do move higher now. Bottom line, tomorrow could actually live up to the hype and be a pivotal day.

Jobs Eve

2011-09-01T22:44:00.000-07:00

My system moved higher to -950 which is technically a buy signal. However, I have to issue a big caveat that it would be unusual to come off of a deep bottom in my system and have this buy signal pan out. A more likely situation would be a dip back under -1000 but for now all I will say is to ignore the buy signal until the price action confirms it. At the moment, the price action is going in the opposite direction with a test of yesterday's short-term top of 1230 failing today and the break of yesterday's low. This is a small victory for the bears but the onus is on the bears to follow through with a thorough break of the 1190-1200 area tomorrow. If that doesn't occur, then I suspect the bulls are going to take this above 1230 in a hurry. Suffice it to say, this jobs report or rather the reaction to it will be significant in determining the next 3-5 trading days in the market. I will be leaving tomorrow for an extended holiday weekend to a destination without an Internet connection and so my next post will be Wednesday evening. For those in the U.S., have a safe and relaxing holiday.

Wednesday Update

2011-08-31T22:17:00.000-07:00

My system has moved higher to -1000. From a system standpoint, we have diverged from the pattern in autumn 2008 but not yet from a price standpoint. Tomorrow looks like the big test and the ISM is certainly going to be the catalyst. A move below today's low of 1209 is a shortable break with a stop above the high of 1230. A move instead above 1230 first will cancel any kind of action for the moment.

Tuesday Update

2011-08-30T22:42:00.000-07:00

My system moved higher to -1200. The bullish momentum will need to be stopped tomorrow or Thursday at the latest if it wasn't already stopped today in order for the autumn 2008 pattern in my system to continue. If that scenario plays out, then we are likely headed lower probably to the 1050 level at a minimum and probably bottoming somewhere near the Fed meeting in September. Another scenario I am looking at as a possibility for the moment is that we are still about to head down but will test the 1120-1150 area and hold it. Then a move back above the top that occurs this week may mean a move to at least the 1350-1370 level by the first quarter of 2012. Although seemingly bullish, what comes after that will likely have us going down for the rest of 2012 to test the March 2009 low. I'm not putting a lot of weight on this scenario but that could change depending on what happens when we go down to the 1120-1150 area. The only other scenario is that we just keep moving higher now to at least above the 50 day SMA around 1255-1260 area and I will be the first to say that I would be thoroughly confused if that happens so I have no further comment except to say that the market tends to do things from time to time that thoroughly confuse me and this would be one of them. The markets are about to be bombarded with significant economic numbers over the next three days right before the holiday weekend so if nothing else it should be an interesting three days.

Monday Update

2011-08-29T21:57:00.000-07:00

My system moved higher to -1500 on Friday and it moved higher to -1400 today. The upside bias has played out as expected when comparing my system now to my system in autumn 2008. It still has not diverged but we are coming to a crucial turning point. If we are to continue along the same path, then there should be a short-term top in the market between tomorrow and Thursday although I think Tuesday and Wednesday are the prime candidates. In terms of a price high, it looks like 1210-1235 is the best spot for that high. If we were to get above -1200 in my system, then the paths have likely diverged.

Thursday Update

2011-08-25T22:32:00.000-07:00

My system barely edged higher to a bit under -1575 but it's almost a toss-up as to whether this is a flatline. The upside momentum is undergoing a big test here as any kind of down day tomorrow should shift my system downward. The bulls are barely hanging on to the upside bias and they just managed to close the market above the 1156 level. The GDP revision and Bernanke speech tomorrow morning should solidify if we will have an upside bias for a few more days. The 1190 high today was relatively close to 1208 but I would have liked to see a closer test and perhaps we still will get that. If we get a downside move tomorrow then we should take out 1121 but 1101 still has a chance to hold for now.

Wednesday Update

2011-08-24T22:03:00.000-07:00

My system moved higher to -1600. I'm expecting the market to overcome any Apple weakness and continue the upside bias over the rest of this week. We should test the 1200-1208 area by early next week at a minimum. A close under 1156 would be unexpected and would threaten this scenario.

Tuesday Update

2011-08-23T21:49:00.000-07:00

My system moved higher to -1700. The rally today means we are still following the same pattern in my system as the autumn of 2008. Unless there is some massive reversal tomorrow, it looks like we have an upward bias into next week and we should test 1208. If we continue on the upward bias, then I would look for a short-term top between Tuesday and Friday of next week. We have ISM next Thursday and the jobs report next Friday right before the holiday weekend and we could see the reversal before those numbers or because of them. But let's first see if my system can get that second day of upside momentum tomorrow...

Monday Update

2011-08-22T20:09:00.000-07:00

My system moved lower to -1725. The similarities to the autumn of 2008 as it pertains to my system continue to be uncanny. There should be an imminent rally sometime between tomorrow and Thursday if these similarities are to continue. If we diverge from this path and head under 1100 now, we should bottom in the 1000-1050 area in the short-term and have a decent 15-20% rally at a minimum but longer term this will lower my estimates of where this bear market ends. If the rally higher occurs between tomorrow and Thursday, it should be enough to take us higher into the end of the month and we'll get near 1208 at a minimum.

Weekend Update

2011-08-21T22:33:00.000-07:00

My system moved lower to -1700. The market just missed the 1100-1120 area but this has again become a wait and see market. I have to admit that I'm a bit concerned that the market has moved down to these levels in a much shorter time span than I was expecting to reach these levels. That could be a warning sign that I am underestimating the severity of this bear market. If we moved down to the 1000-1050 level this week then I think we would bottom there in the short-term and probably bounce back to eventually test 1208 over the next several weeks but longer term this could be a more brutal bear market than I thought. However, if we can hold the 1100 level (for now) then the more dire scenario should be much less likely. The market seemed to crack on August 2nd which is when the whole debt ceiling fiasco was "resolved". With a continuing deleveraging process in the private sector, there is no demand and probably won't be for maybe years. Now with fiscal austerity on U.S. shores as of August 2nd (although it's debatable how much austerity will actually occur), the demand won't be coming from the public sector either. So if there's no demand from either the private or public sectors, where does it come from? I think that's what the market is grappling with and I don't think Bernanke's monetary policy is going to accomplish anything. He can print money until he's blue in the face but it's not going to matter if everyone is deleveraging. The big question is how long will a lack of demand be a problem for the U.S. economy? Unfortunately, I have no concrete answers but the potential is there for it to be longer than most people expect and that is the most dire scenario.

Thursday Update

2011-08-18T17:51:00.000-07:00

My system moved lower to -1675. I was very wrong in thinking we were going to see calmer waters for a while longer before the decline resumed. That's a minor error compared to some of the errors I've made in this blog. My most egregious error was likely underestimating the market's ability to crash in the fall of 2008. Much of that error was due to a pattern in my system that I hadn't seen before and I was doubtful I would see it again so soon but here we are. The lessons I learned from that experience will help in the current experience. That said, the market is looking to make its first test of the recent low and though I think it will be successful this time, I think there will be another test in September that will break 1101. Unfortunately, tomorrow is a daytrade situation because of the weekend. And though it's not my trading style, the risk/reward set-up is too good to pass up. If we get a dip into the 1100-1120 area, it's a good place to go long for a move back up to the 1130-1150 area and stops should be at 1090. This trade would be too risky to hold over the weekend. Whatever happens on Monday will be a big clue as to how the market will trade before the big Bernanke speech at the end of next week. If the market trades between the 1100-1140 area on Monday, we could be setting up for an end of the month rally. This scenario would lead to a typical September, a.k.a. negative.

Special Update

2011-08-18T06:37:00.001-07:00

I'm already wrong in terms of thinking volatility would die down until options expiration but that's okay as this creates a better risk/reward set-up. However, I would avoid the market today which should leave tomorrow as the likely place to buy weakness. More tonight...

Wednesday Update

2011-08-17T22:51:00.000-07:00

My system moved higher to -1625. That said, this is still a wait and see market. The reason is that whoever makes the first move here should eventually get rejected meaning sell strength (between 1225-1250) or buy weakness (between 1100-1150) depending on which way we go first. With options expiration on Friday, volatility may continue to be dampened to decimate put buyers' profits who bought in the thick of the decline.

Tuesday Update

2011-08-16T22:41:00.000-07:00

My system moved higher to -1650. So far, my system has moved slightly up from its depths but we need to see more upside momentum or else the market risks another test of the 1100-1120 area over the next two weeks. We should know by the end of this week at the latest and possibly as early as tomorrow if things will play out this way.

Monday Update

2011-08-15T21:48:00.001-07:00

My system flatlined on Friday and moved higher today to just above -1700. I am guilty of doing far too much analysis this past weekend and now I feel I have a case of analysis paralysis. The truth is there are so many possible scenarios depending on the forthcoming price action that it wouldn't make sense for me to go through them all until they are pruned a bit. In these times of waiting we can ask questions like "Will 1101 be broken or was that the low of a correction in a bull market?" I am looking for 1101 to eventually be broken but the timing depends on the form this correction takes. Could we instead take out 1370? Of course, anything is possible but my analysis points to this being one of the lowest probability scenarios if not the lowest and equates to a black swan scenario to the upside. For those that are more unsure of whether the bull market is over, they can purchase some cheap long term calls while we are at 1200 and do quite well if the black swan scenario to the upside works out. The oversold sell signal in my system came in at the 1234-1261 range so it's reasonable to expect we will get into that range during the correction phase and that area should provide some resistance on the first attempt. When we go there is more of a question mark and that depends again on price action over the rest of this week and potentially next week. I could see the market rallying into Bernanke's speech next week as it hopes for more concrete indications of QE3. EUR/USD has managed to get back above 1.44 and the Dollar again hangs on the edge. That said, this is an important rally for the Euro and if it fails to make a new high and comes back to crack 1.41, it would, in my opinion, lead to a much weaker Euro. That said, I have covered my Kiwi short in case the Euro move is real and the Dollar is about to crack. Another subject I have been mulling over is the commodity secular bull market. You could make a case that it started when oil bottomed in 1998 but since secular commodity bulls occur during secular equity bears, I simply looked at the ratio between equities and commodities which gives us 1999 as the bottom for commodities. The point of this is that we are now 12 years into the secular commodity bull market. The commodity bull market will end at some point, it always does, but it's very unlikely that it's over. The big question of this decade is when is the turn. More specifically, when does the equity/commodity ratio bottom. A case can be made for really anywhere between 2012-2020 at this point. The switch in long-term holdings for investors from commodities back to equities will occur as it always does and it will be crucial to recognize when that happens.

Thursday Update

2011-08-11T21:54:00.000-07:00

My system flatlined today but that's not saying much since there are only 100 basis points left on the downside until the lower bound of -1850 is reached. I bought a tiny amount of calls at the open today but had to sell at the close. Unfortunately, the market this week has made daytrading as the only trading style that mitigates risk and I don't care much for daytrading. The move above Tuesday's high is positive for the bulls and I am actually expecting a relatively calm day tomorrow which should have us closing in the upper half of the week's range. I'm guessing there are not too many investors that will want to take home risk over the weekend just in case there is some bank problem over the weekend that rears its ugly head on Monday as we saw a few times in 2008. Therefore, the volume should dry up a bit. If nothing happens over the weekend, then we should see a continued rally higher next week back above 1200. In the short-term, the 1150-1170 area looks like a good place to buy with stops under 1120 and the sell zone in the 1200-1225 area. The Dollar index continues to consolidate and there is likely a big move ahead. Essentially that means EUR/USD is going to go into a sharp trend. The Dollar index reached an important high in early March 2009 when the equity bull market started and it reached an important low in early May of this year when the equity bear market started. The correlation there couldn't be any more blatant and it seems the Dollar index has some catching up to do with equities.

Wednesday Update

2011-08-10T19:25:00.000-07:00

My system moved lower to -1750. Despite that extreme level, most of the indices within my system are not in the top ten of worst readings ever. The reason for that is the egregiously bad market in October 2008. The S&P 400 did hit its sixth worst reading ever while my Bank/Tech index hit its third worst reading ever. Looking at the black swan scenarios I mentioned yesterday, we can cross out the large gap down scenario. For the other black swan scenario which would put us in the 950-1000 area by early next week, it is still possible since the rally stalled today when it should have broken yesterday's high but we would have to break 1101 tomorrow or else the bulls will be safe in the short-term. Futures markets, currency markets, and overseas equities are pointing against the black swan scenario for the moment but obviously that can change when Europe gets in or during the U.S. trading session. In my system there are very few stocks in uptrends as determined by my parameters but both Apple and Google show up in a few of the indices in my system as still maintaining an uptrend. In this remote black swan scenario, I think it's reasonable to expect Apple and Google to both crack since they are some of the last stocks standing. Google should drop to at least the $485-500 area while Apple would fall to at least the $325 area. Therefore, it's important to watch these two stocks because if investors start selling these stronger stocks it should indicate that they are raising cash maybe due to margin calls or fear and we would then be entering the final drop of this leg of the bear market. If you did buy at the close today and the black swan scenario occurs, you will still get your money back but it will take 3 or 4 months. All that said, the black swan scenario requires a catalyst to get investors to really throw the baby out with the bath water. A decent rebound in the markets tomorrow should solidify 1101 as a short-term low.

Tuesday Update

2011-08-09T22:26:00.000-07:00

My system moved lower to -1700. Today was a case of "you win some and you stay out of some". I took a stab yesterday at catching the falling knife and it turned out to be pretty close to the short-term bottom but I'm okay with missing the oversold bounce. The low today was 1101.54. The 200 month SMA is 1102.79 and for Fibonacci fans out there, 1101.73 is the 38.2% retracement of the 2009-2011 cyclical bull market. So, some pretty obvious levels we are bouncing off of but what really worries me is that the majority along with myself seem to think the market will be going higher in the short-term. Specifically, I think the market will encounter resistance in the 1200-1225 area. This is my favored scenario and if it plays out this way we should some sort of re-test in September or October. However, the black swan scenarios would either be a stall day tomorrow followed by a renewed decline to the 950-1000 level by next week or some kind of huge 8-10% gap down tomorrow that also gets to this level by the end of the week. These are extremely remote scenarios but need to be mentioned as they are still technically possible and I imagine would need to be precipitated by some major unforeseen catalyst. The latter scenario can be crossed off our list tomorrow and the former scenario can be crossed off our list on Thursday at the latest. It is somewhat amazing that with all that has happened in the political and financial landscape over the past month, the Dollar index has barely moved. Equities fell on their own without any Dollar strength. Implied QE3 and a sovereign downgrade of the U.S. did not move the Dollar either. What will move the Dollar?

Fed Eve

2011-08-08T18:58:00.000-07:00

My system moved lower to -1675. This is an extreme level as my system can only go to -1850 if every stock in the indices my system follows is in a downtrend. To put it into perspective, we have only been at this level of -1675 one other time and that is in October 2008 and specifically it hit this level on October 9, 2008. If you go look at the chart, you will notice that the market closed on its low that day as well. From that low to the intraday low of the next trading session, the market fell about another 8%. This is why I sold my long position at break-even today that I took at a stab at just a few hours earlier as noted by my previous post. If the market falls another roughly 8% intraday tomorrow, that means a low around 1030-1040. I will try catching the knife near those levels where we should get a real bounce. Anything under 1100 looks like a short-term gift though. A break below 1000 right now would have me concerned about the longer term picture and by that I mean the next decade or two. Tomorrow, the close is far more important than the intraday action and I would look for a stronger close in the top half of the range. I would also get out again if there is another close near the low. I am out of my short EUR/USD for a loss but will short again on a break of 1.40. My Kiwi short keeps rolling to my 78.25 target where I will cover half of my position. Good luck out there!

Bought at 1120-1125 in S&P 500

2011-08-08T11:36:00.001-07:00

Stops below 1080.