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

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