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