3:30 post

Here are 2 SPY charts.. the 2 day 5 minute and the 1 month 15 minute.  What we have here is a failure to advance.  A series of lower lows and lower highs.

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The Momentum Change indicators are still holding the Sell signal last confirmed 2/22.  I don't feel there is any special insight that I have about how this is going to resolve its self.  I felt yesterday that there was a good chance that the market could sell of from that attempt and failure at the 130 level.  Now, I don't have any idea what tomorrow will bring.  I guess that we will see a very small change in the McClellan today, which will signal a large move in the next day or two.

Sorry, but I don't have any idea.  Better to sit on the sideline and await the next fat pitch.

Best To Your Trading!

Bill

3/18/2011 TGIF

After the UN voted to impose a "No Fly" zone in Libya, Oil shot back up from around 96 to over 103.  Then Libya announced that they welcomed the "No Fly" zone and that they would be happy to comply and start talking with the opposition groups.  Of course Oil then retreated back to 100 and the European markets all rallied.. even the Asian markets rallied.  Kinda gets you all teary-eyed doesn't it?.

After trading higher overnight, the Dow opened higher and traded up as much as 150 points.  as this is written at 10:30, the Dow is up 143, the SPX is up 13 and all the other major indexes are also higher. Oil is off, trading at 100.99, Gold is higher at 1421.9 and Silver is higher at 35.15.  The entire commodity comlex is also sharply higher this morning, with Corn leading the way with a  5% advance.  The Euro has blown through resistance at 1.405 and is trading at 1.413.  IN the meantime, the Dollar has continued its fall toward irrelevance, trading at 75.81.  After major central back support for the Dollar vs the Yen, the Dollar is back down to 81.06.

Here is a chart of the U.S. Dollar, the U.S. long Bond, the Euro and the SPX.  As you can see, when the Long bond is strong and the Euro is strong, and the Dollar is weak, that is not a good prescription for the SPX.  IN other words, Euro Up, Bond Up, Dollar Down equals SPX down.

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The Proprietary Momentum Change indicators are still working on the Sell signal last confirmed on 2/22.  We have no open trades, but I am looking for an opportunity to reenter the short side if the SPX can get back up to around 1295-1300.  Then we will see how the Momentum indicator is behaving.  Currently, the Momentum Change is Bearish, the longer term indicator are also Bearish.  But some of our timing signals are pointing to a direction change due shortly.  For the present, I have no suggestions except wait for the fat pitch to re-enter the market.

Best To Your Trading!

Bill

Wednesday at the Close

Can you say "Dead Cat Bounce?"  I hate that expression as I love cats, and Mr. Loveydovey is sitting in my lap  as I write this.  But it is the most illustrative metaphor  for today's action.

Not an impressive bounce from the hard down day on Tuesday.  The EW guys are confused about whether or not we are in a small wave 2 or have started a larger wave 3 down move, but in any event, they all seem to believe that this should be resolved by Friday, and the direction should be down.

  We will see shortly.  In the meantime, the Momentum Change indicators are pointing to a decline and our positions are 100% bearish.  I am hoping someone can point me to a site or commenter who has a idea how to describe action in the equity market, given the political unrest in the Middle East, Northern Africa, the parabolic move in Oil and Gold and Silver.. and then show me how the persistent weakness in the Dollar can represent the Risk On/Risk Off trade.  I am certain it is "Risk Off, but I can't for the life of me explain Dollar weakness with out scaring myself to death.

Best To Your Trading!

Bill