Equity Market Comment - 11/3/2007

The probability study was off on Friday, but we made it a very productive day anyway.

This model is split for Monday, with the emphasis overall on lower prices.
The scenario it is calling for is the possibility of early strength that is followed by a reversal
in prices, and this strength I am talking about may be hard pressed to last through the first hour of trading.

DAY TRADERS SHOULD CONTINUE TO SELL STRENGTH

The intermediate term model has not improved at all and continues to call for a violation of the S&P 500 lows at 1490 at the very least. The 1465 to 1467 number basis the S&P 500 continues to come up on all time frames of my work so we need to watch this very carefully.

INTERMEDIATE TERM TRADERS SHOULD REMAIN 100% HEDGED AND DOUBLE UP PUTS ON STRENGTH

The long term model still is very constructive and confirms the fact that we remain in a bull market. Although on an intermediate term basis we may run through a rough patch, over the long term prices should continue to rally. As a matter of fact, once the intermediate term weakness has run its course the market should be set up for a great run to the upside.

LONG TERM TRADERS SHOULD CONTINUE TO HOLD A 65% HEDGED POSITION IN THEIR CORE EQUITY POSITIONS TO PROTECT AGAINST ANY NASTY SURPRISES TO THE DOWNSIDE THROUGH THIS ROUGH PATCH

I have been working on a couple of new models that show quite a bit of promise.
Both of them are short to intermediate term oriented and once the full testing phase is over I will begin to publish their readings on the blog.

I also am testing a new mechanical trading system based on the 1 minute and 5 minute charts of the S&P 500 that can be used to trade either the futures or options on the spyders. These will be posted through the day on the intermediate term updates, providing that trading is not to hairy in which case I doubt I will have the time to post.

I hope everybody has a great week-end and I look forward to the opening bell on Monday!