Another trending day at the market!

After being higher overnight, the market opened slightly higher, and at this time the DOW is trading at 12813, up 50, while the SPX is up 0.96.  The COMP and the NDX and XLF are lower, while the RUT and DJT are higher.  As should be clear by now, the financials are the big laggards and the Transports are the big gainers.  After setting new recovery highers again yesterday, the market internals continue to offer warnings to be careful.  The volume, the RSI and MACD and new highs vs new lows and Up volume vs down volume continue to show negative divergences, and I think are suggesting caution.

After a week of good earning, and some disappointments, the market seems determined to  trade higher.  For all of you out there who consider themselves well informed financially, I want to remind you that the markets aften trade completely independent of fundamental conditions.  As someone somewhere said...."the market can remain irrational longer that you can remain solvent." 

I did not trade on my own Buy signal as I was looking over my shoulder at some troubling indicators and was of course focused on what I thought I new fundamentally.... that the market was way overbought.  But once again, I was shown that success in trading is to follow your indicators, and when a position, to carefully protect that position with stop loss orders.  I am reminded again that the thing most difficult to manage is greed and fear.

The break out above the neck line of the inverse head and shoulders is a very powerful signal the market is headed higher, at least for the short term.  I have been looking for a pull back to offer an opportunity to get long, but Mr Market has not been very obliging.

The big news continues to be new highs in the Precious Metals, while Copper, the darling of the equity traders, continues to stall and has not been leading as it did all of last year.  The driving force of all the asset class trades is of course the Dollar, which made a new 3 year low, and is now only 2 cents away for a new all time low.  Until the dollar can catch a bid, I don't think the market will demonstrate much weakness.  One asset class that is showing there may be some change in the wind is the bond market, which has been unexpectedly trading higher, in the face of all the inflation fears reflected in the PM's and the market.

As my old friend and manager Captain Gatorbait used to say.. ."Bill, the trend is your friend" ......pause..... "until it isn't".

Best To Your Trading!

Bill

The Market is up, Unemployment claims are up, and the GDP is down!

After being higher as much as 50 Dow points overnight, the market opened flat, and at this time the Dow is trading up 16, the SPX is up 0.92  and the Transports are up 51, or 0.93%.  The trannies are especially strong, as the Dow and the SPX are only up 0.10%  Most of the major indexes made new recovery highs yesterday, after breaking the neck line of the well reported Inverse Head and Shoulders patterns that occurred in most indexes, and also broke through the existing resistance lines.  The only caveat is there appears to be little enthusiasm on the part of the Bulls, as volume continue to lag.  I continue to look for a correction and a test of the break out, my outlook supported by continued negative divergences in the RSI and MACD in all of the shorter term charts for the Q's, the SPY and the DIA
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The two big reports today are the 1st quarter GDP estimates and the weekly new jobless claims.  The GDP estimate printed at 1.8%, down from the 4% consensus just a month ago.  All sectors were lower, and if not for the inventory buildup, the print would have been 0.8%  New jobless claims for the week printed at 429,000 vs estimates at 395,000 and last weeks revised 403,000.  Not the kind of reporting that would convince anyone the economy is improving... and considering the GDP deflator is constructed without considering things like energy and food, it appears the double dip will appear this Summer or early Fall.

Oil is higher at 113.94 and Brent higher at 122.97.  Gold is trading at new highs, 1535.90 as is Silver, trading at 49.34.  The 10 year Note is 3/8 higher, trading 3.314% and the long Bond is 1/2 higher, trading 4.427%.

The reason for all of the above pricing is found entirely in the FX market.  The Euro is 1.479 and the Dollar, after trading below 73 overnight, is currently 73.21.  The declining Dollar is the reason the PM's are higher, the reason the equities markets are higher, and the symbol of the failed policies of the Fed.  We are at the point where the choices facing the Fed are all negative.  If the Fed continues the QE programs and the ZIRP, the Dollar decline only accelerates.  If the Fed raises interest rates, the Dollar rallies and the economy tanks.  If the Fed does nothing, the economy collapses without the QE stimulus and the Dollar likely rallies with out raising the discount rate.  Of course, at the point, we are looking at negative real rates..

Not that anything I said in the previous paragraph has anything to do with the market.  The market and the real world have been disconnected for some time.....the only question is when will the markets respond to the real world?  I will offer an answer... we will see it as the Momentum Changes indicators generate the next Sell signal.

Best to Your Trading!

Bill

The Afternoon After the Fed Theater

Ok.. Now I know what they are going to do.  It seems they intend to continue to do what they have been doing, because the economy is too weak to withdraw their support.

I got it!  But I don't think that he committed to a QE3 immediately.

The market was positive most of the day, with a surge on the close, with the DOW closing up 95 and the SPX closing up 8.42.  The rest of the major indexes also closed up a similar percentage. On the close, the close,. the SPX, the DJI, the RUT, and the COMP all closed with over bought conditions and negative divergences.  Only the Transports closed with decent internals.  It appears that the news the market did not want to hear did not get made, so it was time again to ramp the indexes on the close.

Beyond the Fed showboating, there did not seem to be much, if any news today that impacted the markets.  One Observation though..... the soft commodities are all down on the close, and the Sugar and the Cotton have broken up trend resistance lines...... and these are the commodities that led the rally off the bottom in 8/2010

I think the SPX wants to trade higher, and I am looking for a place to get long.  We will likely get some kind of a pull back on the morrow and I will be looking carefully at how the indexes approach the older resistance, which of course has now become support.

The TLT has been showing good strength and I would like to be a buyer, but I have been burned twice in the past couple of months and don;t want to get burned again.  But if the TLT (an ETF that tracks the 10 year to intermediate Treasuries) can stay strong, the will be signaling that the stock market rally is in danger.

Best to Your Trading!

Bill

Running the Shorts!

It looks this morning like another trend day, with the Dow up 70 and the SP up 8.30 as this is written.  I feels like the 1334 level has been cleared and is now headed for next resistance level.  Higher.

This break out is not unexpected......and Momentum Change indicators generated a Buy signal last week.  But with the action in the SPY, the Q's, the IWM, and former Bull market darling Copper, I felt it was prudent to wait and see what happens at 1334.  As of 10:50, the SPX is at 1345.26 and has broken the resistance level with authority.  We will likely get trend day, with a close higher than it is currently trading.  My trading strategy is to wait for a pull back, testing the 1334 level from above and to get long at that point.  Tomorrow is a likely candidate for the testing action.

In the meantime, Gold and Silver are having their first little sell off in a couple of weeks, with Gold at 1499 and silver at 45.23.  Oil is a little better this morning, trading 112.40  and Brent at 124.12, while copper modestly improved at 4.328.  Of course the big play continues to be the Dollar, today under 74 at 73.87 and the Euro higher at 1.4629.  Bonds were mixed on the open, but have improved, with the 10 year Note trading up 1/8  at 3.345% and the Long Bond trading 1/2 higher at 4.426.  Is anyone else noting the divergence from the normal trading correlations  Bonds higher, Dollar lower, Stocks higher?.  The second day in a row?  At new recovery highs in the Dow and the SPX?

I am sure someone smarter than I who can offer an explanation. If the carry trade in Dollars is being unwound as is suggested in many quarters, and if the Chinese are selling Treasuries, you would think the Dollar would be up and the Treasuries down.

Case Shiller reports today that the Housing index is at 139.27, one tick off the low 4/2009 at 139.26, and is the 6th month in a row with a decline in housing prices.  The Richmond Fed today and the Dallas Fed yesterday report that Manufacturing has turned sharply lower, with continued increases in prices paid, while prices received continue flat.  The margin squeeze that has long been predicted is finally showing up in the data.  It should not be long before consensus earnings estimates will begun to be reduced.  At that point, either P/E ratios have to expand, or prices have to fall.  Take your pick as to the likely market response.

Pimco is out this morning with another essay on the Quantitative Easing process and how that process has impacted the economy.  Zerohedge has a great review of the report,  which calls QE2 a Ponzi scheme that is "nothing by a profit illusion".  It really is must reading!

Ok, it is time to find a place to get long this market.  I am looking for a test of the breakout.. and will make some recommendations at that time.  Maybe even this afternoon.  It is clear in hindsight that I should have bought the market when the buy signal was first generated, but frankly, I did not like the market mechanics at the time.  (always easier to know what you should have done).

Best to your trading!

Bill

What I am looking at.

I meant to get this out on Sunday, but ran out of time.  I wanted to present a few charts that I think demonstrate the CAUTION  at this 1334 level that I think is appropriate.

The 15 minute for the Q's shows significant negative divergence in the MFI, the RSI and the MACD, plus of course the 2 big gap opens,

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The 15 minute SPY shows the same negative divergences and large gap opens.

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The NYAD 10 day SMA is still negative, and is also still Bearish, failing so far to rise above higher horizontal at +120

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This is chart that surprises me...the  negative divergence in the NYUD Advance/Decline volume, which typically, not always, appears prior to decline.

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There is also negative divergence in the McClelland.

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The Confidence indicator has set up a negative divergence similar to what occured in July, 2007
It also occured in 8/2010 and signaled the Fed to initiate QE2.  But what ever it is saying, the one thing that can not be ignored is that it signals a decline in confidence in the largest market, the Bond Market.

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Best To Your Trading!.


Bill

Still Holding My Breath!

I don't know about the rest of you, but I spent the last 30 minutes of trading Thursday glued to my Stockchart screen, watching the 5 minute 2 day on 30 second refresh........needing to know what was going to happen at 1334.  It was like 30 minutes of foreplay, without the play.  (I had other metaphors but I thought better of using them. ;-)

So we still don't know what is going to happen at 1334 and now I have to hold my breath for 3 more days.  At the close, the Dow had made another recovery high, but did so all alone, with out the SPX, the DJT, the XLF, the Q's, the RUT or the NDX.  SO at least for the weekend, the Bears can be comforted by a Dow Theory non-confirmation.  And the Bulls can be comforted by the widely anticipated break out above the resistance lines and the inverted head and shoulders neck line.

The Momentum Change indicators for the DOW, the SPX, the Q's and the Trannies all generated a Buy signal 4/20 and 4/21.  The history of the Momentum Change signals has been very good, but I use them in context of the market outlook.  Just like I did not like the surprise Sell Signal earlier in April, feeling like if was setting up a whiplash, and I decided not to trade on it. Tthis new signal was several days in developing and I expected it.  But at the same time, there is significant resistance at the 1334 level, and while inverted head and shoulders patterns can be very powerful, they can also fail.

So I have elected to exercise a little patience and wait for the battle at 1334 to resolve.  If it breaks above, there is likely to be plenty of time to catch the up leg,  However, if it fails, there will be plenty of time to catch the next wave down.  In addition, my timing signals are looking for a top mid next week.  While the timing tools had little impact in the Fall and early Winter, I suspect due to the rivers of money printed by the Fed, they have been correct the past 2 months, and I want to respect the signal telling me that the market could be making a momentum top next week.

Have relaxing 3 day weekend, and we will get back into it on Monday.

Best To Your Trading.

Bill

Ya Pays Your Money...Ya Takes Your Chance!

Yesterday, the Proprietary Momentum Change indicators for the SPY,  the Q's and the Transports generated a new Buy Signal, while  the IWM, the DIA and the XLF did not.  Yesterday, the The Dow set a new recovery high, while none of the other major indexes did.  It would seem that all of Wall Street is watching the 1340 level for indications of what to expect next.  A nearly perfectly formed inverted head and shoulders pattern exists in the SPY with a neck line at 1340, with long term resistance at 1340 and the down trend resistance line from the 10/2007 top are all converging on 1340.  There are so many lines at that point on chart, it looks like a big blob of ink.

The VIX  has broken down through a support line that has been respected since the Summer of 2007, the Bullish sentiment as reported at SentimentTraders, is at record Bullish levels,  Margin debt is at record levels, the Euro has broken resistance at 1.45 on a closing basis, the Dollar is making new post 2008 lows, trading under 74, and everyone in the world seems to be buying Silver, or at least is trying to buy Silver.

Yet Greece is expected to enter Liability Management Exercise (better known as debt restructuring) this week end, Ireland continues to move toward rejecting the previously accepted bailout, Portugal admits they need a bail out, Finland elected a new government totally opposed to further ECB bailouts, Germany is voting in regional elections to withdraw financial support for the ECB bailout programs, Japan has still not contained the damage at their broken Nuke plants and competent observers have predicted that vast areas of Northern Japan will likely be declared un-inhabitable. 1st quarter GDP is being revised down to a 1.50 to 2.26% from previous estimates of 4.25%, and 2nd quarter GDP estimates are also being revised downward to 2%.  New home sales are still at historic lows, the biggest Bond Fund in the world has sold their entire portfolio of U.S. Treasuries and have added a $7 Billion short position in those securities, revolutionary fires are burning all around North Africa and the Middle East and the industry that moves all coal, grain, iron ore, and other bulk commodities around the world is nearly bankrupt, while the Dry Bulk carriers are falling every where with the BDI unable to find a bottom.  And S&P has warned that the U.S. credit rating has a negative outlook which may require a reduction in credit rating.

Oh, and the drum beats for the next series of Quantitative Easing are being sounded around the usual channels, of course because the U.S. economy is too weak to survive with out the support of the Fed.

But in spite of all the above and much more too much to cite, the focus of the Wall Street Sales Industry is on the next leg up of the Bull Market, already projecting the next level of resistance for the SPX to be 1425.

Well they may be right.  Or they may be wrong.  But we may as well dance to the music being played, following the direction of the market as the signals show us it be.  Which is to find a place to get long, either prior to or just after a break at 1340.  If it does not work out, we will know why God invented stop loss orders.  Or was it Jack Kennedy..... .I don't remember.

Dow as this is written is up 33 points, or 0.23%, the SPX up 6.25 point or 0.45% and the Transports are up 52 points, or 0.98%.  The transports have led this rally and it looks like they are trying to confirm the new Dow high so the Dow theory stays Bullish.  I am still uncertain.. and want to see what happens at 1340.....there will be plenty of time to buy if that is the resolution, or it will be time to trade the short side of the market.

Best to Your Trading!

Bill

The Mother of All Reverses?

After enduring the Monday madness of the S&P down grade and a 150 point decline in the Dow, this morning the Dow gaped up 150 Dow points.  However, it is a little harder to understand the emotion/rationale/reason for today's big rally.  The talking heads are explaining that good earnings are the reason........somehow, a few companies beating earnings expectations, which of course is based on old history,  can't compare to the potential downgrade by S&P of the U.S. credit rating, a looming future negative.

What else is going in the the world?  Greece is thought to be on the verge of default, Spain just accepted bids at 5.6i% for 10 year notes, Finland just elected a new government that is completely opposed to any more Euro bank bailouts, and Portugal has decided that it needs a bailout after all.  Of course, with all of that good news, the Euro is again testing the resistance 1.455.

Of course, The U.S. dollar is about to break the 74.5 level, on its way to (pick a number).  With the recent revisions to 1st quarter GDP now down to 1.75 to 2.25% and 2nd quarter expectations also being revised lower to a consensus 2.25%, it seems the market is responding to good news on current earnings, with out doing what the market is thought to do best... reflect future expectations looking ahead 6 months.  At least, that is what I was always taught by analysts at the firms where I worked.

As you know, the Proprietary Momentum Changes indicators generated a new Sell signal 4/12, but I did not like that side of the market for a number of reasons, especially since the change was so unexpected, and the fact that it occurred at a time where my timing signals were looking for the market to move higher. As my old friend Robb used to say, it felt like "Whip Saw City".   And technically, the charts did not look that bearish.  So I had no recommendations.

As you also know, I have become very concerned about the long side as well.  I think we are in a trading zone, bounded by 1334 and 1250.  The Q's, the SPY and the IWM have formed what are potentially powerful inverted head and shoulders patterns, while longer term charts of the same indexes present major resistance at levels just a little higher here.  In fact, the long term resistance is located at the same prices as the neck of the inverted head and shoulders patterns.  So I want to see what happens at 1334.. or at 1250 (there is a higher resistance level around 1295 that is also important).  If the momentum change indicators are bullish if the market breaks above 1334, it will be time to get long...however, if the momentum change indicators at that time are bearish, it will be time to get short.

Having said all that, this morning the Momentum Change indicators for the SPY and the Q's have in fact flipped bullish, and if the market stays strong through the close, I will consider the momentum to be Bullish.  But even with a new Buy signal from the SPY, I will not make any trades until we see what happens around 1334. The market I think is making a top, and the volatility we have been seeing since February is the kind of action that has typically signaled market tops.  This is not to say that the market can't move higher... just that I feel risk, on either side of the market is very high, and I like to trade the low risk, high reward set-ups.  Right now, I don't think that condition exists in the market.

Best to Your Trading!

Bill

How Does that Garth Brooks Song Go?

Oh, Yah..."Thank God for Unanswered Prayers".  I sure glad I did not get that re-test on Thursday that I wrote about on Friday.  I would be long and wrong.  As it turns out, I am flat and glad.  Who could have known that S&P would take this moment to threaten a decline in the credit rating of the U.S. that has completely taken WS by surprise?

As I wrote last Friday, and have referred to several times, my timing tools have been looking for a top in late April and again in late May to mid June.  I am coming to think that Mr. Market may well make the late April top THE top, followed by a significant pull back and then an attempt to rally that ends poorly in late May to mid June.  I wish there were some rules that could apply to this market, but I believe that only realistic response to this market is to sit tight until momentum is again consistent with what is actually happening in the market.

I feel I should make it clear that I do not feel that I have to be in the market at all times.. in fact, I have learned that I should only be in a trade when I feel comfortable  and as I wrote last week, I do not feel comfortable right now.  The Momentum Changes signals have reliably confirmed a change in direction for the past nearly 2 year, in most cases with in a day or two of the change in direction of the market.  But the Sell signal generated 4/12 came as a surprise, and in context it did not seem correct.  So I reported what the signal indicated, but I also said that I did not  want to trade on the signal.  In fact, I was looking for a place to get long, and was watching patterns develop that seemed more consistent with the long side than the short side.  Then of course, there was the bullish nature of the Transports and my timing tools that looked for a continuation of the rally.

I would like to say that the Momentum Change signal could see the S&P threatened down grade, but that would be a stretch.  I think what this confusion is telling me is that really strange things are going on in the market.. and until I can see the momentum signals in context with the actual market behavior, I will continue to sit on the side.

Best to Your Trading!

Bill

Taking a longer term view!

I have been very obsessed with the short term movement of the market.  There is a lot of movement, but also because I think something important is happening or is about to happen.  I was comfortable with the new Momentum Change Buy signal that was generated March 21 and March 23.  I was pleased that we got the kind of move that I had expected.. a strong up move that lasted a couple of weeks.  It was very easy to protect gains with trailing stop price points, as the move was consistent with out any corrections.  Then all of our stops were hit over a 3 day period.  It turns out that we got prices very near the high for the move.

I was looking for a pull back that would give us an opportunity to re-enter the long side, and was surprised when the Momentum Change indicators generated a new Sell signal.  I had not expected that, as some of my timing tools had been looking for a minor top in late April, and a significant top in late May to mid June.  So I was reluctant to enter new short positions that would have been consistent with a new Momentum Change Sell signal.  The whole corrective move from the top of the rally felt entirely proper, and I was very concerned with a whipsaw type trade if I entered the short side.

So I did not re-enter the market.  I became the kind of technician that I used to be, looking for patterns that would show me that the correction was likely over and anticipating a new long side trade.  But I was really conflicted, due to the Momentum Change Sell signal generated 4/12, and if I was gong to get long, I wanted to be very sure I could see an end to the correction.  I thought we were close to a turn when the 15 minute chart opened very weak yesterday, hitting the down trend support line, and then reversed.  I was right that it marked the end of the correction.. but I wanted to see some kind of a test.  Unfortunately, the test did not develop and I missed the opportunity.

So I spent the afternoon and evening, and then again this morning, looking at everything and then taking longer term looks at the indexes (where most of my attention is focused.)  I am glad that I did.. as I began to see some things that I did not really like..  Take a look at the 4 year charts of the SPY and the Transports.  If anyone can make a positive case from these charts, please send me a note and show my your thoughts.  After all, TA is an art form, not a science, and I am always happy to be shown something that I have missed.

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 I created the Momentum Change Indicators in their present form in the past 2 years, and they have proven to be very successful. The Sell signals generated in January and then confirmed in February proved to be early, but I did not trade that short side until March 3, with very good results.  I was very comfortable getting long on March 22.  My point is the strategy works.  But like everything else in this trading business, every signal must be examined for context.  And right now I do not like the short side.  After looking for the longer term charts, I do not really like the long side.

For me going forward, I want to see what the Momentum Change indicators are saying about the SPY when it gets back to the 134 level, or when it falls to what appears to be major support around 124-125.  ( I spend most of my time on the SPY. Of course, I also track Momentum in the other major indexes)  At the 134 level, if we get a break out, it will be supported by a break of the neck line of a well defined inverted head and shoulders pattern, as well as breaking above major long term resistance.

If it breaks lower, through the 124, 125 level, it will be telling us that we have seen the top of the March 09 rally, after a double top, or possibly a triple top, depending on the interim market action.  I will also be watching a decline that approaches the long term trend support line, currently at 129-130.  If we break that support, I think the odds will be great that it continues lower, through the 124-125 support.

Having said all that, I think I will sit on my hands and wait for the next high value, low risk trade, and see what develops.  I will continue to post daily as this exciting market continues to develop.

Currently, the Momentum Change indicators have a Sell signal generated 4/12.

Best To Your Trading!

Bill

Trading Alert.. possible new Trades

The Momentum Change signals generated Monday and Tuesday continue to feel like a set up for a whipsaw.  (which of course I have seen before.. it is not a perfect world)  So the way to protect against a big mistake is to keep stop loss orders close by.  I continue to be impressed with the short term action of the Transports, which again today are up even though the other major equity indexes are off. As this is written, the SPX is off 0.30% and the DOW off 0.31%, the Transport are up 0.35%.

Momentum is very close to flipping back to the buy side on the Hourly charts, which is what I have been expecting.  It is true that the Hourly charts are always a guide to the near term switch in the daily charts, which are the source for the Proprietary Momentum Changes signals.  This exercise is an art and not a science, and the old intuitive wisdom has been warning of trouble with the recent Sell signal.  Which of course is why I did not make any trade recommendations.

Although the Hourly is warning of a coming flip back to a Buy signal, it is not yet there.  It is very likely that I will see an Hourly switch this afternoon, and I will report that if it occurs by 3:30pm.

 In the meantime, take a look at this report from Zerohedge on this morning BLS report of new Jobless Claims.  It is another big miss on expectations, with a significant increase in continuing claims.  Doug Short has some info here on the BLS report and a chart of PPI and CPI that is interesting.  As all of his work is.  He also links to one of my favorite charting blogs, Kimble Charting Solutions, demonstrating long term support in this area for the SPX.

Stay close to the computer today.. there maybe some trades coming.

Best To Your Trading!

Bill

Trading Alert.....New Positions possible this afternoon

After trading higher overnight, the Dow opened up nearly 50 points and then sold off.  as this is written, the Dow is up 22 and the SPX is up 1.25.  The Transports, which were the best performing indexes yesterday in the decline, being up almost 0.50%, today is up only 0.04%.  This is again another day to be very cautious...

The DOW, the IWM, the SPY and the Q's have formed nearly perfect Inverted Head and Shoulders patterns, which have a habit, although not perfect, of breaking to the upside.  Which gives me pause with the new Momentum Change signal generated Monday and Tuesday and why I feel this maybe a whipsaw.

On the other hand, the Transports have been leading the market the past few weeks, but when the chart is pulled back to a 3 year look, the resulting pattern is not very pretty.  At least not pretty if I am looking for confirmation that the market should rally from here.

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Now if the Transports looked like the Q's, I would be a happy camper.

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Stay tuned, we may get some guidance this afternoon, in which case I will have some trading ideas.

Best To Your Trading!

Bill

Momentum Changes Alert

The Momentum Changes indicators have been deteriorating since the last Buy signal.  The McClellan has moved negative and Sentiment is going to flip to negative today.  Yesterday, the IWM and the QQQ flipped to Sell, while the SPY remained neutral.

This morning, with the weak open after being off overnight, the SPY Momentum Change signal turned to Sell.  However, the Transports remain on a Buy signal, and in spite of the sell off in the DJI and the SPX, the Trannies remain on the plus side this morning.  For the last several weeks, the Trannies have been leading the market and I want to trust their guidance here.

All of our recommended trades have been sold with handsome gains, with the exception of the Copper JJC ETF, which lost 1.05.  Any existing Long positions are in jeopardy and should be protected.  However, I do not like the Short side of the market today..... it feels like a whip saw that is news driven.  The Momentum Change indicators are coming late in the decline, driven by disappointing earnings at ALcoa, Japanese radiation fall-out and a sell off in Oil.

While the SPY has taken out the near term support at 131.90, there is still good support at 128.5.  When entering a trade, I want to have a target in mind that is larger than 3 SPY points.  But plans don't always work out, and I settle for less than I hoped for. However,  a new trade based on the new Momentum Changes Sell signal at this point does  not seem worth the risk.  I want to see momentum when or if the SPY sells down to 128.5.

Best To Your Trading!

Bill

I'm Back!

After 8 days filled with visiting family, including 2 teenage grand daughters, and visits to the Florida Beaches, St. Augustine and of course burgers at The Breakers, I am on the keyboard.  This is a lot easier!

Most interesting news over the weekend was the report at Zerohedge that Bill Gross and PIMCO, the worlds largest bond fund had completely eliminated all U.S. Treasury positions and had in fact established a net Short Position of 7.2 Billion equal to 3% of asserts.  In addition, it is also reported the funds largest position is Cash at $73 Billion, equal to 31% of all assets.  Due to the cost-to-carry of the short position, it is being seen as a political statement.  A speculative negative cash flow investment by an income driven safety-of-principle mega bond fund should certainly send a message.. not sure who the message is directed at but it really should be heard by the BTFD crowd.

It was also reported on Friday that the White House and the Congress had reached a deal that cut about $38 Billion from largely Discretionary Spending.  This is likely only the first battle in what is certain to become a War over the shape of the Federal Budget.  The outlines of the coming War are being reported everywhere on the Web, so I won't bother you with lots of opinion and links.  I do however have an observation. 

As long as Republicans insist on protecting Corporate bene's like Oil Depletion allowances and refuse to consider Corporate Tax reform and Military budgets, and Democrats refuse to consider Social Security and Medicare reform and both parties refuse to look at Federal programs like Farm Subsidy and Ethanol Subsidy, all we will end up with is tinkering at the margins of the Federal Budget, attacking those programs without well funded support, and passionate debate over social issues that have no impact on the Federal Budget yet can become major obstacles to reaching a resolution of the budget crises.

The Republican Representative Paul Ryan has become a spokesman for the Conservative majority in the House.  Yet his proposal for the Fiscal crises included slashing Discretionary spending by $80 Billion while adding $28 Billion to Defense, while ignoring the revenue side by protecting tax loopholes for Oil companies and  other multinational Corporations does not consider tax increases that most economist, even conservative economists, think are necessary.  In other words, an Ideological approach designed to comfort the base, (about 30% of the population) while ignoring the larger national good.

The market are up this morning after being higher in over night trading, with the Dow up 40 and the SPX up 2.25.  The other major indexes are mixed.  Oil is still the big story, with Brent trading at 122.5 and are near record levels priced in Euros.  WTI is trading off a little at 112.03.  Gold made a new high over night, and Silver approached 42, before backing off and currently trading 41.13  The rest of the commodity complex is mixed. 

The Euro is at 1.445, after trading at 1.45, and the Dollar is up a little, trading 74.97 and briefly interrupting its dive into irrelevancy.  The 10 year Note is off at 3.825% and the long Bond is off at 4.645%.  The 10 year/30 year spread is now down to 82 basis points..... not good for the banks, and maybe telling us not good for investors.

Momentum Change indicators are still Bullish, although some of the indexes are moving toward neutral.  All of the recommended trades have now been stopped out, with gains in every trade but the copper (JJC) trade. I will be looking for an opportunity to re-enter on the long side if an opportunity presents its self.  But volume and advance/decline numbers are not acting well, and Bullish sentiment is at near-record levels. This whole project is beginning to look like late Summer, 2007.  The next Momentum Change Sell signal will be very critical, as I expect it to reflect market top for this Bull rally in the Secular Bear Market.

Best To Your Trading!

Bill

Trading Alert Stop Loss Triggered

Out with family again today and there will be no commentary.  Back to regular updates on Monday.

Yesterday, we were stopped out of IWM, UWM and the TNA.  This leave only the SPY still active.  Now the effort is to find a re-entry point, as the Momentum Changes indicators are still Bullish.

Best To Your Trading!

Bill

Trading Alert.. Stop Loss Prices

Sill spending time with visiting family, so no commentary today.  No changes in outlook.... Momentum Changes indicators are still operating with the Buy signal of 3/23/2011.  A couple of the recommended trades have now been stopped out, 2 with gains and 1 with a loss.  There are still 4 trades open. 

I have continued to tighten the stop loss prices as the market has advanced to protect our gains. 

Best To Your Trading!

Bill

Trading Alert... stop loss prices

I will be out all week, with only stop loss pricing being changed.  If we get stopped out today, which I think is likely, then the next trade is coming down the pike.  Momentum Change signals still point to a Bullish move from here, but it is likely to be a little bumpy and on a pull back we will find a new entry point.

Best To Your Trading!

Bill

Trading Alert.. New Stop Loss Prices

I have family in from the North, and will only be updating stop loss prices and re-entry points for the balance of the week, and back to regular commentary on Monday, 4/11.

Note the new stop loss prices in the SPY, IWM, UWM and the TNA

Best To Your Trading!

Bill

Trading Alert..New Stop Loss Prices

No commentary today..

Just updated Stop Loss Prices.

Don't forget to update your trading accounts.

Best To Your Trading

Bill