Monday Afternoon

Lots of buying in the first hour, takkng the Dow up 80 points, or 60%.  All of the indexes were higher this morning, but enthusiasm has faded for some sectors.  at 3:15pm, the Dow is up 72 points, or 68%. The SPX is up 4 points, or 0.30%.  The Transports are up 22, or 0.44%, while the RUT is down 3.65 or 0.44%, the NDFX is off 1.68 or 0.07% and the COMP us iff 8, or 0.29The XLF is up 0.06 or 0.35%, and the BKX is off .24 or 0.43%.

Momentum has not improved much for the Bull, even after a substantial rally Thursday afternoon, Friday and now Monday.  I would guess that we could see another day or two before this rally rolls over into another decline.  I am looking for a decline on the next pull back into the 55 ema at 2860 in the SPY.

I have seen several comments in the past several days that refer to a study, going back to 1929, the 80% plus of all the gains in the market can be accounted for by moves that develop in the last trading days of the month, and continue into the first few trading of the following month.  Seems hard to believe, and I often seem to forget this little nugget myself, /but  it seems to be playing out again this month..  Some cycle works points to trading top this week, and the Momentum Change indicators continue to look for a pull back.  It will be important to watch the action the next two days as it  tests the LOD and HOD of the previous day.

I read a very interesting report this morning from David Rosenberg of Gluskin Sheff.  The entire Breakfast with David is behind a a subscription wall, but you can register for free and receive the daily report around 10:30am in your inbox. 

At 77.5 in February, the consumer sentiment index is at its highest level since
January 2008, up from 74.2 last month and above consensus views. But a more
complete picture would include this ― 77.5 is the very weakest this index has
ever been 20 months into a post-recession recovery, and even in the jobless
recovery in 2002, it stood at 90.9 at this juncture and in the jobless recovery in
1992, it stood at 85.3. So sorry, 77.5 still does not do much for us.
Keep in mind that half the responses were taken by February 9th and that the
survey ended February 23rd, so the vast majority of the survey captured the
period to February 18th when the S&P 500 spiked to a high of 1,343.

Best To Your Trading!

Bill

Monday Morning

Europe and Asia equity markets were up overnight, and the U.S., after trading lower most of the weekend, rolled over and opened with a .50 cent gap in the SPY.  at 10:30am, the Dow is up 73, the SPX is up 6.65.  Al the other major indexes are also up.  The violence in Libya continues escalate, with some observers thinking that the country could sink into civil war.  Of course, that would mean a lengthy interruption of the 1.5 MBPD delivery of that prized Sweet crude.  The Sauds claim they are replacing that production with an increase in their own production, however, it appears the replacement is a lower value Sour crude.

Oil traded over $100 this weekend, but sold off over night and is trading down slightly at 97.44.  Gold is higher at 1410.4 and Silver is also higher at 33.57.  The Euro is higher, trading at 1.3833 in spite of weakness in the debts markets for Spanish and Portuguese paper.  The elections in Ireland went as expected with the long time ruling party being replaced with a new crowd.  The reports are that this new crowd is very unhappy with the Bailout imposed on the previous government by the ECB and they will be negotiating a new settlement that would not place the Irish tax payers on the hook for the bad loans made by other EU banks.


The Dollar is weak again this morning, and is trading right at support according to my charts.  Mr Greenback needs to get going, or the going is going to get much harder.  (Like that?)  The U.S. bond market continues to respond positively  current events, with the 10 year Note up slightly, trading at 3.412% and the long Bond is flat at 4.503%

The Proprietary Momentum Change Indicators generated a Sell confirmation on 2/22 and it is still in effect.  The recommend trades have all been stopped out with small profits, and it is not what was expected.  However, they is another opportunity coming up shortly to re-enter the market, and that opportunity could come as early as Tuesday or Wednesday.

I will have some comments this afternoon on the best print for the Chicago PMI, since 1988, and the Personal Income and Saving print.

Best To Your Trading!

Bill

TGIF 3:45pm

Sorry.. I don't see a trade I like at this point... I guess we go into the week end flat.

we are now stopped out of all the trades from 4 days ago....

I am happy there are no "I hope it goes back up" positions.".

Best to Your Trading!

Bill

Mid Day TGITF

The Spy is trading around 1313.75 as this is written.  The normal correction of the most recent decline should be to 131.61 or 132.20  or 132.78, which are the Fib numbers.  The 5 minute chart is tracking resistance at the 132.20 level.... if this holds into the last 1/2 hour of trading, I may decide to re-enter the short side.

Glad I looked at the price before I posted this... the SPY is now at 132.35

I will make a decision around 3:30 about re-entering a few trades.

Best To Your trading!


Bill

Wow! What a Week!!

News yesterday suggested Libya's Gaddafi (I have seen his name spelled several different ways) was shot, and that rumor triggered a decline in Oil prices, which in turn strengthened the markets.  This morning, it appears he is still alive, but oil is trading flat from the close.  Gold is off 9 at 1406 and Silver is off, trading at 32.77.  The Euro is taking a breather, trading at 1.374 and the Dollar has a nice bounce, trading at 77.30.  This sucker needs to find a bottom!  The 10 Year Note is up, trading at 3.436% and the long Bond is trading higher at 4.529%.

4th Quarter GDP's second revision has printed at 2.8%, vs expectations of 3.3....Biggest contributors were a decline in Personal Expenditures, falling from 3.04 to 2.88 and imports, falling from 2.4 to 2.17

It appears oil production from Libya has declined by at least 800,000 bpd from the normal production levels around 1.5 million bpd.  There is concern it may fall further, and the are reports that Gaddafi has threatened to destroy the oil fields if he is forced out..  The Sauds have responded to pressure from the consuming nations to ramp up production, which they have agreed to do, increasing production by 8% to over 9 million bpd.  The news probably explains why oil has not retaken the recent highs.

There had been talk in the media about the impact on the economy of the spike in oil prices, and most commentators pointed to $4 per gallon gasoline. Now, the metric is $5 per gallon gasoline.  The impact of the increased oil price is much debated, but there is an interesting story at ZeroHedge that is useful.  The chart posted, Courtesy of John Lohman describes a scenario that oil prices at current levels with cost the typical family $700 over the next 12 months, which in turn will cost the 0.5% in GDP.  Very well worth the time to visit. 

The Market are higher this morning, with all indexes on the plus side.  The Dow is up 40 and the SPX is higher, trading up 7.88 at 1313.88. We got stopped out of the FAZ, QID, TWM and the TZA this morning, with small profits in each. This is certainly not what I was looking for, but a gain is a gain, and the stop loss orders have again prevented a trade from turning into a loss. The remaining trades are still open as of this post.

The Proprietary Momentum Change indicators are still on Sell, and I will be looking for another entry point.  It may be that we get a rally today and early next week, before Mr Market tries to correct again.

Best To Your Trading

Internet Still Down!

Limited service.. phone company says they will get service restored ASAP, just like they said this morning.

Some questions about FAZ and TZA.  FAZ has reverse split 5 for 1 and the TZA was reverse split 3 for 1.  QID and TWM are also on track to reverse split.  The accounting handled by the broker.  If, for instance, you had 1000 share of FAZ, you now have 200 shares, trading at 41.18. If you had 1000 TZA, you now have 333 full shares and a fractional share.  The ETF company, Direxion, will redeem the fractional shares in cash.  The 333 shares of TZA are trading at 42.19.

Hopefully, the internet connection will be back up tomorrow.

FAZ and TZA have been adjusted for the splits.

Bill

Thursday

My DSL is down,and the phone company can't get a new splitter installed until this afternoon.  I should be able to update by 2-2:30.  I am in touch with the market on the I-Phone, but not able do much typing.

....... don't forget to update the stop loss orders.

Back Soon

Bill

Hump Day, 2:30pm

This is a trading alert.. the Stop Loss points have been updated. please update your stops quickly.  The rally that has started is, in the words of my old friend, Capt. Gatorbait, starting way too early.  But you never know.. lets get some protection in place.  If the rally losses steam, then we are still in good shape.

Another Trend Day?

After trading higher overnight, the market opened lower, bounced, and has now broken to lower lows than LOD yesterday.  This may be shaping up as another down trend day.

The big story continues to be Northern Africa and the now the impact on the Italian Economy.  Italian 10 year now spiking.  There are reports estimating that if the Libyan and Algerian oil production is shut in that Oil could see $200 bpd.  West Texas Intermediate continues strong, trading at 96.67, while Brent trades at 108.82.  The Commodity complex is getting hit again today as speculators liquidate their long positions.  Gold is modestly higher, at 1402.8 and Silver is consolidating its blow out move, trading at 33.01.  The Euro is surprisingly strong, given the issues in Italy, Portugal and the recent German election results demonstrating the German People are tired of backstopping the ECB.  The Euro is trading at 1.3756 and the Dollar resumes its decline, trading at 77.37.  I am frankly surprised at this action.. if there is really fear in the markets, it would be normal to see the Dollar rally and Safe Haven bond rally.  But for the past 2 days, U.S. treasuries have rallied strong, while the Dollar has weakened.  This seems confusing.. maybe the Dollar really is losing its position as the preferred world currency.

The 10 year Note is up over 1/2 point, trading at 3.433% and the Long Bond is up nearly a full point, trading at 4.5521%.

As noted in our Trading Alert yesterday, the Momentum Change indicators have generated a 2nd Sell confirmation and we offered new Short trading ideas in the short levered ETF's.  The recommendation is for Stop Loss orders to be placed at the swing point until the trades have an opportunity to begin to work out.  As the market moves, I will tighten up the stop loss points.

It would not be unusual to see a bounce in here, which is why the stops are a little loose right now, so that a small bounce does not take out the positions.     

Best To Your Trading!

Bill                                   

Trading Ideas

The Proprietary Momentum Change indicators continue to hold the Sell Confirmation and it is time to re-enter the Short side of the market.  I am not sure that we have seen the top yet, but it is likely that we have a trading opportunity.

The new Short position with be familiar to you, with a couple of new ones.  The symbols, price and stop loss points are now posted in the Trading Ideas section to the right.

Don't forget the Stop Loss orders.  I will tighten up the stop loss orders after a day or two, but I  want to give the market a little while to sort out its new direction.

Best To Your Trading!

Bill

Trading Alert....Momentum Change Sell Confirmation

at 1:45pm, I have a 2nd Momentum Change Confirmation and will be recommending new short trade positions this afternoon around 3:30pm.

Caution is advised... wait until the market closes on the last 1/2 hour of trading to see if the Momentum Change signal is still confirmed.

Best To Your Trading!

Bill

Steady Boys.. Steady!

Cable News and Network News has done a good job of reporting the violence in Northern Africa and the Middle East,  so I don't need to repeat what you already know.  What is important is to recognize that it is likely that the world is changing before our eyes and nobody has any idea of how this is all going to turn out.  There will of course be winners, and there will be losers.  In terms of Capital Risk Management, my attention is on "not losing" rather than on "winning".  There will be a lot of investors looking for a seat as this turmoil plays out.... just want to sit in my chair and wait.  There will be plenty of time to dance once the music plays again.

After being done 100 points in over-night trading, the market gaped down, trading off nearly 90 points on the open, and has rallied to off 50 by 10:45.  Oil, which had a very volatile up-thrust over the weekend, is trading at 91.60 after trading as high as 97.  Gold is trading higher at 1401 and silver is trading higher at 33.08, after trading nearly 35.  The balance of the commodity complex is mostly mixed, with some of the recent high fliers like cotton, wheat and Rice off sharply.

The Euro is higher at 1.3695 after trading lower most of the past 3 days.  The Dollar is lower at 77.60.  If the Risk Trade is off, it is sure not showing in the Dollar.  Bonds seem to be the catching the frightened money, with the 10 year Note up almost 5/8, at 3.51% and the long BOnd up 3/4 at 4.636.

The indexes are all trading lower, but off their worst levels of the day.  The Dow is currently off 52, the SPX off 9.11, the Transports off 90 and the XLF off 0.25.

Our Momentum Change indicators have moved away from Neutral but are not yet ready to again confirm the Sell signal of 1/20.  The trading account is flat, and has been since getting stopped out after the last Sell confirmation on 1/28.  We await a Sell Confirmation to re-enter the short side, or a new Buy signal to enter the long side.  This has been a difficult month, as our Momentum Change indicators continue to be Bearish, the internal measures of the market health continue to deteriorate with new short term negative divergences, but this Bearish momentum and declining market internal health measure have not been enough to halt the advance of the indexes. I am confident that we will be able to identify the next move in the market, and disciplined use of stop loss orders will again protect us.

Best To Your Trading!

Bill

Happy Presidents Day! (I think that is the reason for this Govenment Holiday)

I took a trip to Tarpon Springs on Friday morning, with every intent to return in time for an early afternoon post, but got tied up and did not return until near 5:00pm.  My Bad!.

Lots of news over the week end, mostly regarding escalating violence in Libya, with a side story regarding Portuguese bond wides and the nearing Irish elections.  Oh, and growing public anger in Wisconsin at the Governors attempt to eliminate Collective Bargaining rights for  Public Employee union members.  Oh, wait... growing doubts the Federal Budget can be voted without a government shut-down.  Premarket trading in the Dow has the index down 80 points, and Gold up 15 and silver over 34, and oil trading over 91.   European indexes down 1.5% to 3.5% .

Lots of go-juice to pour on the U.S. markets Tuesday morning when they open again for trading.  Could be another No-Volume, "Bad News is Good News" POMO financed melt up!  But, then again, it will be Tuesday, not Monday which has had the year-long reputation of being the best Buy-in-the-morning,-sell in the-afternoon trading day.

Our Proprietary Momentum Change Indicators continue to function with the Sell signal first generated 1/20, confirmed 1/28 and still in effect.  This does not suggest that new short positions should be initiated, however, it does suggest that long positions should continue to be sold into strength.  We await another Sell confirmation to enter new short positions, or a new Buy signal, to initiate new long positions.

In the past week, I noted new short term Negative divergences in the NYAD 10 SMA, the NYAD 19 and 39 SMA, the McClellan, the Parker Sentiment indicator, the NYHL ratio, the NY New High, minus New Low, and the Confidence Indicator.  RSI and MACD in the major indexes continue to demonstrate Negative divergences, and the much-watched Copper, which has been promoted as a bell-weather leader of the rally for most of the past 13 months has taken a decidedly negative turn since 2/14 and RSI for Copper is also taking a dive.

It will certainly be an interesting week for us traders, and we will see if the "Risk On" trade is finally about to ride off on the back of Northern African revolution and violence.  Stirring the pot is a  change of mind by the Irish, who may no longer be willing to play the "Bail Out The Banks" game with their national finances.  Also news this morning that Germany's  Merkel has lost a significant State election by over whelming majorities, demonstrating that the German people are done playing Santa Claus for the other ECB's (or St. Nicholas as the case may be)

Best To Your Trading!

Bill

Good News and Bad News

Headline this morning from the Philly Fed..... "Current Business Outlook Explodes Higher", printing 35%, up from 19% last month and the highest in 7 years. I read through the report as posted at CNBC and learned that Prices Paid had surged to 67.2%, up from 54.3%.  What they did not report, but was in the report, is that Prices Received rose to 21%, up 3.9 from last month.  Interestingly, Prices Paid, less Prices Received  has reached a level not seen since 1979.  Can anyone spell "Crushed Margins"?  It looks like Sell Side Analysts will be burning up their key pads, adjusting earnings expectations for the rest of the year.

Also reported is a CPI print at 0.4%, vs expectations of 0.3%, and a core rate of 0.2%.  Of course, that does not include increases in food or energy.  Or Cotton, which surged today to a new historical high above $2.  It must be the demand for new white robes from all those Middle Eastern revolutionaries needing to look good on TV.  (I wish I had said that, but credit must be given to ZeroHedge).  Also this morning, the New Jobless Claims report was offered, printing 410,000, up 25,000 from last week and higher than expectations.

The last headline that caught my attention was the new high in bonds issued by Portugal, seeming to say that perhaps those Europeans have not yet resolved their Sovereign debt problems after all, even though they have been off the front pages of the Business Media.  I addition, I am reminded the Irish to go the polls at the end of this month to elect a new government, which promises to re-write the terms of the ECB  bailout.  These are really interesting times!

The markets opened soft this morning, off about 15 Dow points, and then have rallied since the Philly Fed report.  At 11:30, the Dow of up 11, the SPX is up 1.53, while the rest of the major indexes are mixed.  Oil is higher at 85.18, Gold is nearing 1400, trading at 1381.5 'and Silver is at 30.88, just 4 cents away from a new Post Bass Bros high.  The Euro is higher at 1.360 and the Dollar is lower at 77.96.  Surprisingly, the 10 year Note is 1/2 higher at 3.565% and the Bond is also 1/2 higher at 4.651%

OUr Momentum Change indicators are again in Neutral territory, and the 1/20 Sell signal is still in effect.  In case anyone needs to be reminded, the best results are achieved by acting at the time the signal is generated, or when the signal is confirmed, and I do not recommend shorting at any time distant from the signal or the confirmation.  Of course, long positions should always take advantage of any opportunity to sell after a signal is generated.

As I have stated repeatedly since this rally has continued after our initial Sell signal, I will have no trade recommendation until I get either a Sell confirmation or a new Buy Signal.  There are still a number of active timing signals that suggest a market top is at hand, and a large number of divergences.  In addition, for the past 4 trading days, the Confidence Indicator has been Bearishly diverging, as is the McClellan and the Sentiment Indicator.  With new highs being achieved daily, the internal measures of strength continue to erode.

Best To Your Trading!

Bill

Thursday Morning

Another day in the life of the "Rally That Knows No Correction!"  After an evening reporting Asia and European markets mostly higher, and pre-opening trading showing positive Dow and SPX moves, the market gaped open and at 10:30 is trading higher in all indexes.  The Dow is up 65, or 0.53%, the SPX is up 7.60, or 0.59%, while the Transports are up 0.95%, the RUT is up 0.82%, the XLF is up 0.48% and the COMP is up 0.65%.

Oil is up, trading at 84.64, Gold is down, trading at 1372.70, and Silver has backed away from its flirtation with new Post-Bass Brother highs, trading at 30.40.  The commodity complex is mixed, however Cotton continues it relentless advance, up another 3.68%. The Euro is down today, trading at 1.348 and the Dollar has resumed its winning ways, trading at 78.65.  The Bond market has stumbled again, after 2 days of small rally, with the 10 year Note down, trading at 3.634 and the 30 year Bond trading lower at 4.648%

PPI reported today jumped, printing a 0.5% increase, vs expectations of 0.2%, ex Food and Energy of course. Anyone who wants to measure inflation merely scratches his rear and makes a guess. Housing starts reported at 596.000, which was higher than January 2011, but lower than January 2010.  An interesting report yesterday from our local Realtor Assoc. (Central Florida).. 75% of all closed sales in the Month of January were short sales or foreclosures, with a median price of $94,000.  Interestingly, 80% of those sales closed with cash.  You can understand how we must feel in this market, when the Summer of 2007, the median price for a single family home was $243,000 and everyone got Option Arm deals with 95/5 financing.

There is an interesting post at Zerohedge this morning,  describing "How To Fake an Economic Recovery".  I had hoped for a little humor, instead I got a little dose of reality.

Our Momentum Change indicators are still Bearish, having moved closer to a Sell Confirmation yesterday, but moving back toward Neutral this morning.  Our trading positions are still flat as we are looking for a signal to re-enter the market.

Best to Your Trading!

Bill

Tuesday Afternoon

The Dow is currently off 58 and the SPX is off 5.73.  All the other major indexes are also off for the day.  The only strength is in the Transports, trading higher 0.24% at 5230.34.

Unless the market tanks the last 1/2 hour, my Momentum Change indicators will not generate a Sell confirmation today.  But we will be examining carefully all the numbers this evening after 6:00 when they generally are all updated.  I am very mindful that several well respected timing tools have projected a top this week, and I am also anxious to get some short positions placed, but I will wait for that Momentum Change confirmation.

Best To Your Trading!

Bill

Tuesday Morning

There are two stories this morning that have impacted the early trading.. the first a report that inflation in the UK printed 4%, much higher than the expected 3%.  This bit of news ran the Gold trade $10 higher, and moved Silver up to 30.78.

In addition, the Empire Manufacturing Index rose 3.5 points to 15.4, which is received as good news.  But again, the real impact data was reported in later paragraphs.  Prices Paid rose to 2 and 1/2 year highs, as Prices Received was unchanged, again anticipating margin pressure and smaller profits ahead.  Sales figures also disappoint as Advance Sales printed at 0.03 vs expectations of 0.05 while inventories increased again, reaching highest levels since April., 2010

Oil is trading higher at 85.20 and the remaining commodity complex is mixed.  The Euro retreat is temporarily halted, trading up at 1.3517, while the Dollar retreated a little, trading at 78.49.  The debt markets are little changed this morning, with the 10 year Note trading lower at 3.625 and the long Bond also trading off at 4.674.

Lots of talk in the TA press, with concern again growing that Mr Market is losing momentum.. but that has been our song since 1/20/2011.  Our Proprietary Momentum Change Indicators are still working with the Sell signal of 1/20 and the confirmation of 1/28.  Our indicators have moved from neutral back toward confirmation of the Sell since Friday last, and if the market today continues the decline started this morning, we may get a confirmation, in which case we will have some new trade ideas.

And don't forget that we have several timing tools looking for a top this week.  Although these tools have not been as perspicacious in recent months as they have in the past,  they should of course be considered. (I kinda like big words!)

The Dow is off 0.43% at 12215.74 and the SPX is down 0.41% at 1326.51.  The rest of the major indexes are mixed, with the TRAN up 0.10% at 5212.93 and the XLF up 0.18% at 17.13

Watch for a Trade ALERT this afternoon.

Best to Your Trading!

Bill

Monday Morning.

Good Morning all.. this is going to be a big week.  Reading my mail this week end, I am being told that this is the week that marks the end of the March, 09 Rally and begins the decline that has been so long delayed.  We have Hindenburg Omens, Bradley Model Turn dates, Raising Bearish Wedgies, err, Wedges. Tech Failures, Over Bought Stochastics, Negative Divergences as far as the eye can see, Phi Mate Turn dates, Valentines Day (just checking to see if you are paying attention) Major Market Top setups and Trend Line Resistance in the major indexes and cycle tops too numerous to mention.

It is all good!. I am waiting for my Proprietary Momentum Change indicators to confirm the Sell signal first generated 1/20 and confirmed on 1/28.  Mr Market has powered through those turn signals, and we got stopped out of the positions entered 1/20.   I have been reluctant to enter new positions until I get a confirmation of the Sell signal.  I am watching carefully today... .but the early action does not look like I will get that confirmation today.

The market timing tools that I have used successfully in past are also looking for some kind of market  top this week, But those tools have been a little dull the past 2 occasions I have used them.  Mr Market has seemed to be dancing to a musical score my tools can't cut.  (is that a mixed metaphor?)  So I am anxiously awaiting a Sell confirmation.. I will certainly miss a couple of points at the top, but if the market does begin to roll over this week, I guarantee that we will see it and be able to catch it nearly at the top.  Or not......but if the continues higher after we get a second confirmation, we will also have stop loss order recommendations to prevent any substantial loss.

Not much actual news this week end, now that all is hunky dory in Egypt.  No Sovereign Debt crashes.....just some whispers again that commodity price increases in things like Corn, Copper, Rice and Rubber are about to have an impact on Corporate Profit Margins.  Oil is up a couple of ticks at 85.71, Gold is up, trading at 1364.5 and Silver is up, trading at 30.40.  The Euro continues to correct, trading down at 1.3473, while the Dollar continues its rally at 78.66.  Our Momentum Change indicators generated a Buy signal in the Dollar last Thursday... but this is a very volatile market and we have had some whipsaws in the recent past.

The Bond market continues to find bidders, with the 10 Year Note up 5/8 at 3.619% and the Long Bond is up 1/2 at 4.659%.  With the Dollar, Bonds and the VIX all trading higher this morning, maybe we really are seeing the beginning of the "Risk Off" trade.  The Market opened flat, and at 11:00am, the SPX is off 0.14% at 1327.22, the  Dow is off 0.30% at 12237.86, the Transports are off 0.46% at 5210.42, while the RUT is up 0.17%, the NDX is up 3.10% at 2381.99 and the XLF is off 0.33% at 17.03.

I will let you know if I get a Sell confirmation intra day.

Best To Your Trading!

Bill

TGIF

The equities markets were mostly lower in Europe and Asia, and the Dow opened this morning off about 30 points.  The other indexes also opened lower, but now at 10:30am, the Dow if off 6, the SPX is flat and the Trannies are up 20.  The rest are most flat.  It looks like the Transports are making a run to catch up with the recent new highs in the Dow and SPX.

Oil is slightly lower this morning, trading at 86.47, while Gold and Silver are modestly higher at 1364 and 30.10.  The Euro is  off at 1.355. while the Dollar is strong, trading at 78.53 .  I don't always publicly offer my Momentum Change indicators for Dollar, as it is a very volatile market and is prone to whiplashes.  But for what it is worth, Momentum has flipped to the Buy side for the Dollar, while Momentum for the Euro is Neutral and trending lower.

The debt markets are finally catching a bid, with the 10 Year Note up 5/8 at 3.619% and the Bond is also up 5/8 at 4.692%  As long as the Risk Trade is clicked "OFF", the bond markets, and the Dollar should perform well.  A number of short term traders are suggesting the SPX, hitting it upper trend line has set up a short term reversal, with which I agree.  The Momentum Change Indicators, first warning of a Sell on 1/20 and a confirmation on 1/29 has been moving from Neutral back to Sell.  After getting stopped out of the trades from 1/20, I have  been waiting for another Sell confirmation or a flip to the Buy side before re-entering the market.  The Momentum Change indicator is close to a confirmation again of the Sell signal.... I will send a Trading Alert if that occurs intra-day.

Joe Granville used to talk about the "Wall of Worry" that his Bull Market calls always had to climb.  I don't know that he is still publishing his news letters  (as if anyone would read them) but he had a great gift for metaphor.  Just to remind us of the shape today of the Wall of Worry, it includes Sovereign Debt troubles in Spain and Portugal and an election in Ireland shortly that is likely to install a new government that is not as favorably disposed to the ECB bail out recently accepted by the existing government.  Ireland may choose instead to go the route of Iceland, and let bankers take the hit, instead of the Irish Tax Payers.

In Washington DC, the newly elected Republican Congress is showing increasing disregard for the party leadership and calling for larger cuts to domestic spending than first proposed.  Initial proposals now are focused at traditional Republican targets, where cuts are popular with the ideological base, like cuts to NPR, Environmental programs, Jobs Training, Education, etc.  No word yet on action on any of the favored programs, like Defense and Farm Subsidies where there are real dollars that could be saved.  And lets not forget the Debt Ceiling vote in early March that has the potential for real mischief.

Then there are reports of continuing deterioration in housing valuations across the country, and a recent report stating that 27% of all mortgaged homes in the nation are upside-down.  And a growing awareness that inflation is increasing in energy and food, while a recent report that 20% of National Income is paid by the Federal Government.

There are more, but I am out of time.

Best To Your Trading!

Bill

Thursday Morning, Pre-Open

I am off this morning to visit the Money Show-Orlando which is playing at one of our high-end-convention hotels near the Disney World.....should be good fun... talking with market experts, looking for the answer man.  Oh, wait!  The last time I asked the Answer Man whether the market was going to go up or go down, he said Yes, but not right away!.

But I am repeating myself.  It looks like the Risk Trade is again off this morning, as over night, the Dow is off 42 and the SPX is off 7.  First call is for a gap down open.  Lots of news on with wires this morning.. the ECB stepped in and bought the distressed Portuguese 10 Year Note that could not find a bid.  Rumors that the Saudi government Prince has died, but the Saudis have not confirmed,  Bernanke reminded the Congress that perhaps his QE2 program could not do all the Economic lifting, and that fiscal policy also had a hand.  The action in the Bond market has investors re-thinking the inflation outlook, and watching the 2s30 spread that has reached historic levels.  And lastly, lots of TA's are looking critically at the Transports non-confirmation and the major indexes making new highs while the RSI and MACD for the indexes are diverging sharply..

Oil is off this morning, trading at 86.37, Gold is off at 1357.19 and Silver is also off, trading at 29.79. The commodity complex is generally soft, with the exception of Sugar, and Cotton which is up another 2.5%. The 10 Year Note is off a few ticks, at 3.66% and the 30 yr is down a little, at 4.72%

We have several timing indicators which are signaling approaching tops for late this week and next week.  Our last few timing signals were ignored by Mr Market.. maybe this time they will prove prescient.

I hope to be back at the computer before the close.. if the Momentum Change indicators get back to a Sell confirmation I want to be able to post some trading ideas.

Best To Your Trading!

Bill

Hump Day, Mid-Afternoon

Mr Market has turned decidedly soft this afternoon, after trading flat to slightly down most of the morning.  Our Momentum Change indicators are again moving from neutral back into Sell territory.. as I have been stating, I will wait until the indicators signal either a Sell confirmation or a new Buy signal before entering new trades.

I was reading David Rosenberg this morning, and I thought his comments were of particular interest, as he spends some time on both the "Positive" and the "Negative" aspects of the economic outlook.  Here is the link to his "Breakfast with Dave" newsletter.. it is free and I think it maybe the best free economic report available.  If you can't open the link, go to Gluskin Sheff and and enter your data to receive the morning report.  His morning report is the best 5 minute read of the day.

There is an interesting post at Zerohedge this afternoon re: the 10 Year Note Auction.  It seems the auction closed at 3.67%, the highest since last April, 2010.  The big news here is that the Direct Bids came in at virtually none, while Indirects came in at 71%.  It is normally suspected the Indirects are foreign Central Banks.....and this share of an auction subscribed by the Indirects is unheard of.  (sorry for the dangling participle).  As an aside, the last time a 10 Year Note Auction closed at 3.67%, the market promptly took a dive.

Best To Your Trading!

Bill

Hump Day, 10:15am

After trading lower overnight, the market opened lower, and currently is trading essentially flat.  The indexes are mixed, up or down less than 0.15%.  Mr. Market is likely taking a breather after 7 straight days of advances.  Oil is up a little at 87.41, Gold is up a little at 1365.8 and Silver is strong, trading at 30.36.  The rest of the commodity complex is up, with Corn opening limit up.  The Pits are finally reacting to the news on Monday that China is expected to buy as munch as 9 Million tons of Corm, vs their previous expected purchases of 1 Million tons.  Now that is a lot of corn!

The Euro is again marching higher, trading at 1.370, while the Dollar resumes its decline, trading at 77.67.  Which brings me to my favorite crashing market.. the Bond Market.  Todays action is a breather for the bond market after breaking the support lines for both the 10 Year Note and the Long Bond.  Today the Note is up about a 1/4 at 3.70 and the Bond is also up about a 1/4, at 4.75.  I have attached below the charts for the price action of the Note and the Bond... you will note that both have now signaled further decline by breaking support with authority.

The SPY has closed for 2 straight outside the upper Bollinger Band....we should be finally getting some correction.  We are still working with the Sell signal of 1/20/2011, although the signal has moved to neutral.  We will continue to wait for a new trading opportunity with either a new Buy signal, or a confirmation of the Sell signal.

Best To Your Trading!

Bill

Tuesday Morning

This morning the Dow is up 20 at 12181 and the SPX is up 1.2 at 1320.16,  The rest of the major indexes are up small, except the Transports, which are trading off 10 at 5060.  While the DOW and SPX are making new recovery highs, the Transports continue to signal there is something wrong with the continuing advance with its persistent non-confirmation.

Oil is off again, trading at 87.38, Gold is up 17 at 1364 and silver is making another run at $30, trading at 29.94.  The Euro is up slightly at 1.364 and the dollar is back under 78, trading at 77.72.  The bond market continues its slide, with the 10 Year Note trading at 3.660 and the long Bond trading at 4.707.

It is the Bond market that is most worrisome....the Note has taken out the support established in mid December and looks to be in free-fall.  The Bond  has taken out significant support and also looks to be in free fall.  It becoming clear that the FED has lost what ever control they thought they had with the longer end of the yield curve.  With the 2 year Note at 0.792, the 2s30 spread is at 391 basis points.  I am not sure if it is a record, but it is darn close.  It is this spread that has historically been the measure of inflation expectation.. and it is really shouting "Look At Me!"  I  have been in the Deflation Now camp for a couple of years, but it is beginning to look like Chris Martensen and John Williams and the rest of the Inflation Now chorus are gaining the upper hand.

This is going to be a really interesting year.

Our Momentum Change indicator Sell signal first generated 1/20 and confirmed 1/28 is still in effect, yet it has moved to a neutral position. I await either a new confirmation of our Sell signal,  or a new Buy signal to enter new trading positions.

Best To Your Trading.

Bill

Monday, Early Evening

Another Melt Up day on Wall Street, driven by POMO, with the Dow up 70 and the SPX up 18, on 60% of average daily volume.  While the Dow and SPX made new recovery highs with an increase of 0.57% and 0.72% respectively, the Transports increased 0.30% and remain well below their 1/18/2011 recovery high.

I feel the pressure to place a new short trade, as long as the Momentum Change indicators are on a Sell signal.  But the bottom line is always Capital Management, and I don't want to enter the market again on the short side until I get a confirmation of the original 1/20 Sell signal.  Of course, if Momentum does flip to the Buy side, I will recommend new long positions, but not yet.

Many investors are anxious to get back into the market, especially anxious to catch the moves to the upside.  But there is one BIG caveat.. what is the risk?  It is in fact Risk Management concerns that I have developed the Proprietary Momentum Change Indicators.. to signal when market direction is changing.  However, there are two separate concerns.. a Sell signal should get a long position out of the market, as Risk to the Long position is too great.  It does not necessarily follow that  a Short position should be entered.  But if one is disposed to trading the short side, it is at the time of the new Sell signal that one should take a new short position.

The cash generated by the sale of a long position can either be parked in a money fund until such time as a new Buy signal is generated or look for a place to enter a new short sale.   If a new short position is entered, it must be protected by a nearby stop loss.. I like to use the most recent lower swing trade close.  It is not unusual that a trade can be stopped out, while the direction is still expected to favor the trade.  Because risk management requires a safety valve that protects against significant losses developing while waiting for a winner.  Every long term investor I have ever met became one because the short term trade he loved did not work out initially and he held on, waiting to be right.

I think there are 2 really big opinions to be held regarding this market.. what is the short term outlook and what is the long term outlook?  Holding a strong opinion about 1 does not invalidate the other.  I held a long term Bearish from October,  2007 until April, 2009.  At that point, I changed both my short term outlook and my intermediate term outlook to Bullish, and I expected to hold that outlook until the Spring of 2010, when my intermediate term outlook and short term outlook flipped to Bearish.  I have been Bearish with a long term and intermediate outlook since 4/2010.  All of my signals since that time have been short term, from several days to several months.  Today, my long term outlook is bearish, as is my intermediate outlook.  So let me strongly suggest that any Sell signal from my Momentum Change indicators is likely to be signaling the actual final top of this rally.

But as we have seen, some times the Sell signal does not mean that the indexes will not continue higher.  In the current case, the Momentum has actually diminished while higher prices are being posted. So until Momentum changes back to the Buy side, I will continue to suggest that long positions be closed, and await a new short term Buy signal, or a confirmation of the 1/20 sell signal to re-enter the short side.

Best to Your Trading!

Bill

Monday Morning

After being up a little all weekend in the futures market, the equity market gaped open this morning, and at 11:10 the Dow is up 89 and the SPX is up 11.10.  All the other major indexes are also up.  The RUT, COMP, NDX, SPX and the INDU are trading at new recovery highs, while the TRAN, while aslo up on the day, is still well away from making a new recovery high.  The behavior of the TRAN is in direct conflict with the rest of the equities indexes.  This is called a non-confirmation and the Dow Theory guys are getting real anxious.  This non-confirmation has been going on now for over 2 weeks.  I suspect they are about ready to call "BS".

Concern over Egypt seems to be diminishing, at least as that concern is reflected in the price of oil.  Oil is down this morning, trading at 88.77.  Gold is up, trading at 1350.10 as is silver, trading at 29.28.  The commodity complex is higher across the board, with Wheat, Sugar and Rough Rice and Cortton being the largest percent gainers.  The Euro is soft again this morning, trading at 1.352 and the Dollar continues its bounce, trading at 78.14.  I pointed out my concern last  week with the debt markets, and my concern grows this morning.  The 10 year Note is again off, trading at 3.674% and the Long Bond trades lower at 4.747%.  The break in price support for the note and the long bond is now clear... Higher rates are clearly on the way and this can't be good news for the equities market.

While equity index values continue to advance, that advance does not look pretty on the charts..... The Relative Strength Index, with out exception, continue to reflect waning support.  Below are the charts for the NDX, RUT, INDU, SPX and the TRAN.  The text books all state that declining RSI precede declining prices.  But those text don't tell us how soon..  Our Momentum Change indicators are still reflecting the 11/20 Sell signal, but as of this morning, they have moved back to neutral. We are coming up on another series of timing signals looking for a top in the middle of February, so we will wait for either a new Sell confirmation or a Momentum Change before taking another position.

Here are the charts.......

Best To Your Trading!

Bill

Week End Update

The efforts that I, and many more perhaps more skilled than I, make trying to understand the zigs and zags in the markets are all based in understanding the history of the markets, attempting to ascertain what elements currently observed in trading activity are similar to previous trading activity, and what, if any, relationship the current activity might have to previous trading activity.  We try to pin-point the patterns, symmetries and cycles that were present in previous trading activity that are similar to current trading activity.  We also try to recognize what elements in the current market are different than what might have existed in the past, and try to estimate the impact of the currently observed differences.  As has been written by many people, including historians and technical analysis specialists, it is clear that history does not repeat exactly, but it does clearly rhyme.  It is our job to make sense of what we think we understand, make a projection of how we think the market is likely to behave, while at the same time, offering an escape plan if the projection turns out to be inaccurate.  This escape plan must protect trading capital against significant damage.

What this approach to investing in the market does is require a willingness to be consistent and persistent in having an opinion that offers opportunity while at the same time a willingness to admit an error and make a change.  For a very aggressive trader, that means, for instance taking a long position, expecting a move higher, and being willing to sell if that expected move is not quickly forthcoming.  The aggressive trader might then be willing to re-enter the long position at a higher, or a lower price, depending on new data.  Or, he may see that the more likely direction is down, and he may enter short positions, with the same willingness to cover his position if the expected move is not quickly forthcoming.

A less aggressive trader might be willing to abandon a trade with a small loss if the trade goes against him initially, and then re-enter at a later date with new data, but he may be unwilling to trade from the short side, preferring to wait in cash until a new long opportunity develops.  Depending on the investment horizon and  goals, these basic understandings of investing strategies only require an acceptance of an anticipated holding period, and a pain tolerance for a larger or smaller  possible loss before admitting an error.  But that is the extent of the difference.  Every successful investor has some well described goal, and more critically, has a well described and disciplined escape plan that places a limit onthe extent that an error can damage an investment portfolio.

In my opinion, these strategies that are typically understood to be trader strategies, should also apply to what are commonly considered long term investors. Managing an investment portfolio during the Bull Market of 82 to 2007 might have seemed comfortable operating without an escape plan, as the market seemed to bail out any mistakes.  But the Old Timers always understood that even seemingly safe markets required an escape plan, and they were able to side step the declines of 87, 98, 2000.  Their superior performance during those years is a testament to their strategy.  But most investors and investment advisers did not learn the lessons regarding escape plans, and their poor performance, even in the longest running, biggest Bull Market in history is their legacy.

The only difference in a strategy for a trader, even an aggressive trader, and the long term investor, is the pain tolerance for mistakes.  The trader has a very short leash, and will admit a mistake quickly, while it might take a long term investor longer to admit a mistake.  The pain tolerance is measured qualitatively in dollars...

I will add some thoughts about pain tolerance and investment horizons on Wednesday.

Best To Your Trading!

Bill

TGIF Afternoon

I was bouncing around my data lists at the St. Louis Fed web site last evening, and after this mornings BLS report, I thought these current charts might be of interest.

 The first shows the nature of current Federal Spending.  Can you say "Parabolic"

 The second shows Civilian Unemployed Longer than 27 weeks.  Is that a Green Shoot?

This shows the size of the Asset Back Commercial Paper market..... Is it still functioning?



This shows Commercial and Industrial loans at all Commercial Banks...You thought they were lending?

So where have all those Federal Spending dollars gone?  Oh, ya'.. here it is on deposit at the Fed.  These are the dollars that did not go into the stock market.






Enough of Show and Tell..... I encourage everyone to check out the St. Louis Fed site.. it is free and you will not believe the information they make available.

It is 3:10 and it looks like they are setting up the SPY for a Ramp on the Close scenario... but if the Spy can trade below 130.50 with a closing 5 minute candle, I will post a trade alert.. We may get some action yet this afternoon.

Best To Your Trading!

Bill

TGIF 2/4/2011

I was all ready for the expected BLS report, expected to show new jobs in the range of 150,000, with some expectations around 175,000.  After the small move yesterday in the McClellan Indicator, which normally signals a big move the next day, I was ready to offer some short ideas this afternoon that would capture the last EW #5 move up, and set up for a top. I was also watching the pre-market prices, all trading higher overnight, waiting for the BLS report.  Now, after the report, the first Call is looking for a flat open.

BLS reports actual new jobs at 36,000, non-seasonally adjusted U-6 up to 17.3% from 16.6%, and labor force participation at 64.2%, the lowest percentage since 1984.  But the good news is that unemployment is down to 9.0%.  But wait!  there is more news down in paragraph 4 and 5. 

The labor force has dropped from 153,690 to 153,186, but the numerator (you know, the number of unemployed people) dropped from 15 million to 13.9 million.  IN TWO MONTHS!  You have to read the fine print to understand that the decline in the number of unemployed is that those unemployed longer than 99 months are no longer considered part of the labor force.  See how easy it is to get a better headline number for unemployment?

The opening prints are mostly flat to down small in all the major indexes.  It will be 10:30 before we get an idea how the market is likely to trade today.  Oil is up .87 at 91.41, Gold down at 1353.2, and Silver is up .27 at 29.0.  The Euro continues to correct, trading at 1.358 and the Dollar continues the rally at 77.94.  I am getting concerned for the bond market...... the 10 year Note is down another 1/4 at 3.583% and the Long Bond id down nearly 1/2 at 4.693%..  After what looked like an attempt to find a bottom, for the past week, prices have been trading at and breaking trend support lines.  It is beginning to look like the Note is headed for 4% and the long Bond headed for 5%.  I can't imagine that kind of action can be good for the equities market.  Or the growing inflation expectation.

I am watching today for an opportunity to place levered short trades and will post a Trade Alert if or when that occurs.

Best To Your Trading!

Bill

Thursday After The Close

The Dow made a new, recovery closing high.  It was not joined in its optimism by any of the other indexes.  SPX? No.  RUT?  No. NDX?  No. SPF? No. TRAN? No. 

It will interesting to see how the internal numbers print this evening.  I am probably going to wish I had recommended new short levered positions this afternoon by the time 10:30am comes around tomorrow.

I did not see any comments last evening on the non-confirmations from any of the Dow Theory guys.........The EW guys are getting real anxious.. and a couple of the day traders are looking for another small rally, but are generally coming to the conclusion that the TOP is nearly in

As for our Proprietary Momentum Change indicators, they are still signaling the same weakness that generated the Sell signal on 1/20.  I am hoping for another confirmation.. it does not look like I will get it tonight, but tomorrow is another day, and another opportunity for a profitable new trade.

Best To Your Trading!

Bill

Thursday Morning

Not quite the day I was looking for.  After the good news on unemployment, new claims down to 415,000 after expectations of 420,000 and last week at 457,000 (of course after the usual upward revision) and only 120,000 falling of the back end if the 99 week UEC programs, I thought we would have an up day.  Only 4 killed in Egypt, cotton up limit the 2econd day in a row and at prices not seen in over 150 YEARS, and especially after the U.N. Food and Agriculture Org reported food cost rose 3.6% in January to levels previously seen in during the food riots in Mid 2008,  I thought sure the market would be up!

Commodity markets are surprisingly subdued this morning, with almost 50% of markets trading UNCH.  Oil is up .29 at 91.15, Gold is up 1.4 at 1332.9 and Silver is up a couple of tick at 28.35.  The Euro is giving up a little, trading at 1.362 and the Dollar is marginally higher at 77.66.  The 10 year Note is off nearly 1/2 at 3.534% and the Bond of 1/4 at 4.638%   Yields are back knocking on the December 2010 highs.

Momentum signals are still Bearish, in spite of the big rally Monday and Tuesday.  below is the SPY with the Bollinger Band buy and sell signals highlighted.  A close above the upper band, with a subsequent close back inside is generally considered a Sell signal, while a close outside the lower band and subsequent close back inside is generally considered a Buy signal.

Depending on the action this afternoon, I may have some trading ideas this afternoon.

Best To Your Trading!

Bill

Wed Morning

Overnight trading in the market was flat until about 9:00am when the futures began to trade lower, trading down 35 Dow points just prior to the open.  As the moment, the indexes are mixed after a soft open, with Dow up 1 and the SPX down 2.  The Transports are down down narly 50 points, or 1%, but the rest of the major indexes are mixed with little hint of direction.

The Oil market has strengthened, with the North Sea crude trading at $100 per barrel, while the WTC is trading cash up .64 at 91.41  Gold is down 2.90 at 1337.4 while Silver is down .006 at 28.45.  The Euro is off a couple of ticks at 1.381 and the Dollar is up a couple of ticks at 77.08.  The 10 Year Note is up a little at 3.44 while the long bond is flat at 4.60

After the excitement yesterday, the market is surprisingly indecisive.  Everyone can see that we have major non-confirmations in the Dow Theory, and little or no support from the broader indexes.  Surprisingly, after the rally Monday and Tuesday, the RSI and MACD in all the indexes has negatively diverged from the new highs. I keep looking around for confirmation  that momentum has changed back to the up side, and I don't see it.  Our Proprietary Momentum Change indicators have moved very little, still on a Sell signal first generated 1/20 and confirmed 1/28.

There is little or no news that should be capable of generating this sharp rally, after the move on 1/28.  Market commentators are reduced to stating the market is up because the first day of the month is usually up. The mostly discredited ADP payrolls number printed  187,000 new jobs, against expectations of 140,000 and the 50,000 reduction of last months outlier print.  Westinghouse reports earnings are up big, due to accounting changes, however, operating earnings reported up only 1.5%  due to increased material costs and reduced sales volume.  Can we hear "crushed margins"?  Mr Market didn't like the news, bidding the stock 5 points lower on the open.

We were stopped out of our positions yesterday, and it is always discouraging to have a trade not work out.  No trading indicator is fool proof.....and while our trading signals have been very accurate, money management discipline requires us to use stop loss orders.   Our #1 concern is to not let ourselves get trapped in a market that is not moving our preferred direction.  We recognize that there is always a new trading coming down the pike, and if our momentum indicators flip back to the Bullish side, we will act on the signal.  But that is not yet the case.... our momentum indicators are still solidly Bearish, and we will look for a place to re-enter the market with new trades.

Best To Your Trading!

Bill

Spitting Black Feathers

Man, this nasty Black Crow is a really tough old bird!  You know, the one baked up into this humble pie.  After our Proprietary Momentum Change Indicators generated a confirming Sell signal on Friday, lighting up the maximum number on our signal scale, I thought the top was in.  Not!  The Dow and the SPX have both lifted to new highs.

But it still does not appear all is well with Mr Market's health.  The RSI and the MACD are both flashing short term Negative Divergences, as well as long term divergences.  The Transports, the SPF, the NDX and the RUT are still not at new highs, and it does not appear they can make it today.  I will be interested in leaning what the Dow Theory Gurus have  to say this evening about non-confirmations.  As if anyone has any idea what any of this action has to do with the experience on the ground of the American Middle Class.

The latest headline measures of the business environment are pointing to an improving economy, yet the sub paragraphs in all of these reports keeps reminding us that margins are collapsing, pricing power is lacking, the housing market is again in decline for the past 4 months, and there is little evidence of actual growth that can be attributed to anything other than Government spending.  The commodity complex behavior for the past 4 months, and especially the last 1 month, indicates escalating inflation in food stuffs and basic materials, the BDI continues to crash, nearing historic lows, and the Middle East appears to be catching fire.  Yet the two most widely recognized measures of the health of the economy, the Dow and the SPX, are making new highs.  Go figure.

We are stopped out of all 4 of our recommended trades this afternoon with small losses.  Although our Momentum Change signals are still pointing to a lower market, the stop loss orders are designed to protect us from our selves....getting us out of a market that is not moving in our preferred direction, and also offering us an opportunity to re-establish our positions at better prices.

As my old friend and manager, Captain Gatorbait, used to say...  "if this was easy, we would have 3rd graders in knee socks doing it."

Best To Your Trading!

Bill

Tuesday Morning

Mr Market has opened strong this morning, after trading higher overnight.  Oil is off .28 at 91.91, Gold is off .20 at 1333.6 and Silver is up .086 at 28.255.  The rest of the commodity complex is mostly higher, with wheat being the only donwn tick.  The Euro is slightly higer at 1.3762, while the Dollar is off, trading at 77.37.  The 10 year Note is off 5/8 at 3.453%, while the long Bond is down nearly a point a 4.63%. 

The Dow is trading up 0.72% at 11977.53 and the SPX is trading up 1.06% at 1299.59.  Both indexes are flirting with the highs of last week, while they are trading against the trend resistance lines and a double top.  Other indexes are also trading about 1% higher but are still below last weeks highs.

Economic news this morning is mixed, with the best news being that the ISM has printed higher at 60.8 against expectations of 58.0, but digging through the sub-paragraphs, we learn that Prices Paid have surged to 81.5 vs expectations of 73.5  This continues to flash the RED Warning sign that all is not well with earnings expectations for 2nd and 3rd quarter earnings.  It is hard to make earnings targets when pricing leverage is 0 while margins are getting crushed.

The crowds continue to grow in Egypt and Jordan has installed new government and Prime Minister.  It appears the unrest in the Middle East continues to roll across the area as food inflation climbs to new highs.  Rice yesterday closed limit up as the US rice crop is expected to decline to 1989 levels.  I guess it really true that hungry people get mad.

No change to our Momentum Change signals.....indicators are still solidly in Sell mode.  If we get new highs today in the SPX and DOW, it will not trigger new momentum change signal.. but that event could trigger our Stop Loss orders in some of the levered short positions.  If that does happen, we will wait for another opportunity to re-enter the market.

Best To Your Trading!


Bill