Monday Morning

After a weak opening, stocks have rallied and the Dow is down 12 and SPX is down 2.38.  Oil is getting close to $90 per barrel, trading at $89.40, and gold is again trading higher at $1,417. . Our timing indicators are pointing to a short term peak here in Gold, maybe peaking tomorrow.  The Euro is at 1.328. while the dollar is again firming, trading at 79.80.  Stories out of Europe express worry about the decision to be made tomorrow by the Irish budget makers.. how will, or how can, the government implement the tax increases and the budget cuts demanded by the ECB in return for the 86 billion Euros offered to save the Irish banks?  Some very smart people think the decisions reached in Ireland will negatively impact the Euro, taking the Euro down by the year end to around 126.

Which of course will mean a strengthening of the dollar, and with increasingly bleak unemployment news undermining the recovery optimism in this economy, the strong dollar outlook is gaining traction.  And with a strong dollar outlook, the equities markets may have a hard time delivering the Christmas rally that so many Bulls are expecting.

Our proprietary Momentum Change indicators generated a new Buy signal on Wed last week, but the gap open did not give us an opportunity to establish new positions, and we have not seen an opportunity yet this morning for a new trade.  In addition, several of our most trusted timing tools are flashing a warning of an impending decline.  We are looking for a pull back to either turn our momentum indicators Bearish and give us a new Sell signal, or to give us a buying opportunity and a confirmation of the recent Buy signal,   If we sound a little confused, it is because we are a little confused.  When we are confused, we like to stay out!

As experienced traders are aware, even the best signals sometimes force a whiplash experience.. luckily, we did not get a good entry point after the last Buy, so we will wait until either we get a Buy confirmation and an entry point, or we will get a new Sell signal.  Right now, It could go either way, but we are increasingly concerned that Sovereign debt issues could be a triggering event for our own equity and debt markets.

Best Luck to your Trading.

Bill