Friday, January 4, 2008
I encourage you to continue the voting on the week-ends as this is when the tabulations really begin to drop off.
Also, if we can get more of the subscription based readers to vote then I have a feeling we can take the #1 spot.
Once again, Thanks from the bottom of my heart and lets keep the momentum building.
I am currently working on the week-end market comment and it will be quite in depth so I do not see it being posted until Saturday night.
I realize that I say it all the time but equities are really at the cross roads and not just on the short and intermediate term time frames but the long term as well.
Stay tuned as things have the potential to get very very interesting here, with some serious volatility continuing in the markets.
However, if you look at one of the Fear Indexes below the chart you will see that it is at or very near levels that indicate a low of some significance.
I know that I sound like a broken record here, but the market has its back up against the wall and needs some type of stabilization in prices to keep the secular bull market in force.
There is no question about how bearish the daily chart currently looks.Most of the signs point to lower prices, but also to a selling climax in the near future that should end what might be only the first leg of the decline.
The daily chart really does nothing to clear up the possible short term direction of stock prices, other than calling for an intra-day reversal from a sharp sell-off. As I said above, we are going through a very telling period here and the possible outcomes will be from one extreme to the other.
It is at times like these that we must pay very close attention to volume, price structure and sentiment.
Price Structure certainly does not look well especially with the breaking of the uptrend line off the recent lows.
Volume is rather anemic for a market that would be looking for a low of significance. Volume is saying that while a snap back rally of sorts is always a possibility, the final intermediate term low has yet to be put into place.
Sentiment is one of a handful that shows promise for higher stock prices. There remains quite a large amount of pessimism in the markets according to the sentiment surveys and the very stubborn Investors Intelligence Survey on the S&P 500 has moved all the way to a very bullish 37% Bulls which is a 4 year low. Although there is always more room for more bears to roam, but at least this number dictates that the longer term remains more bullish.
The chart below shows that the market is at a point of balance and probability dictates that the scales should tilt in favor of prices moving higher over the short term.
Once again, this pattern is a threshold pattern that needs the market to cease the most recent decline in order to stay valid. It is just one more pattern of many that continue to tell us that the market is at a make or break point over the intermediate term and perhaps the long term as well.
In a nut shell, it is evident that we have reached the crossroads on the vitality of the equity markets. It is now time for the market to prove itself as to its true internal condition and we will get this answer very shortly indeed.
THE SHORT TERM WORK IS CALLING FOR ONE MORE PUSH LOWER, JUST BELOW 1419.
THIS SHOULD COMPLETE THE FIRST LEG DOWN AND FROM HERE WE COULD LOOK FOR A 50% RALLY OF THE DECLINE BEFORE THE FINAL DECLINE GOES INTO EFFECT.
OF COURSE TIME IS GOING TO PROVE US RIGHT OR WRONG, BUT I AM NOT GOING TO PURCHASE PROTECTIVE PUTS JUST YET WITH THE SIGNALS I AM GETTING FROM THE SHORT TERM WORK.
Thursday, January 3, 2008
Wednesday, January 2, 2008
CORN HAS SATISFIED ITS UPSIDE TARGET FROM THE TRIANGLE BREAK AND APPEARS GROSSLY OVER EXTENDED. THE COMMERCIAL TRADERS ARE ALSO HEAVILY SHORT WHILE THE TREND FOLLOWING COMMODITY FUNDS ARE HEAVILY LONG. BOTH VERY BEARISH INDICATIONS OF FUTURE PRICE LEVELS.
I HAVE KEPT THE STOP VERY CLOSE SIMPLY OUT OF RESPECT FOR THE MOST RECENT STRENGTH.
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While this breaking of the triangle is a bearish event, there still needs to be some follow through to the downside in order to confirm the pattern. It would be of no surprise to me if we see a rally Tuesday back to the bottom line of the triangle which just happens to come in at the pivot point 1453.67, before the decline really gets going. If this comes to be the case then it will allow a further reduction in equity exposure as I will be trying to get down to the 15% invested level.
The downside target for the triangle is 1340, which is quite a sizable move.
If this break does confirm then I will be purchasing some put options to protect the Long Term Equity Portfolio.
Now, while this action today is of bearish consequence, it does not take away from the long term viability of this bull market. It merely should prolong the correction that has been in force now since June 2007, but I will be putting safeguards in place just in case this correction decides to become something more.
There still are some things that need to come together to confirm this short term down leg, but it would be prudent to prepare for such an event.
Tuesday, January 1, 2008
Keep the stop close just a few ticks under the most recent low.
P.S. I am going to continue posting the commodity trades until I have the Futures blog up and running.
Monday, December 31, 2007
Today did begin to clarify some of the indecision, but there still remains a fog of sorts.
This is a possible trend construction we currently are in and this scenario is bullish and would call for a strong rally to begin very quickly as in the first trading day of 2008.
I have kept the 30% equity allocation into equities and the long term portfolio remains unhedged. I have also not made any changes to the short term trading portfolio and the 20% in 7 days portfolio.
We will know very soon what the short to intermediate term will offer and adjust our posture as such.
I continue to lean towards the bullish side.
Sunday, December 30, 2007
CURRENTLY I HAVE CRACKED THE TOP 5 AND AM AT NUMBER 3 AND I COULD NOT HAVE DONE IT WITHOUT ALL OF THE READERS OF THIS BLOGS HELP.
KEEP IT UP AND KEEP VOTING EACH DAY THAT YOU COME BY TO READ THE BLOG.
MAYBE WE CAN CRACK THE #1 SPOT!!
If the strong opening we saw in the morning was able to hold and actually push a bit higher, then things would be a bit clearer, but this was not the case.
This was exactly my thinking when I only began to allocate back into equities in very small steps and currently I have only a 1/3 exposure to stocks.
So here is the short and sweet of what is currently on the board.
We must be prepared to quickly pare back our equity exposure should we see any type of rapid deterioration in the market and there is a fairly high probability of lower prices in the very short term. How low will depend upon many things, but now it appears that we must remain cautious about stock prices. This will entail scaling back not only the short term equity trading account, but the high risk 20% in 7 days portfolio as well.
It is at times of indecision that the best course of action is to remain very lightly exposed to equities until the picture begins to get a little clearer.
In order for the market to continue to rally, it will have to overcome the very high probability pattern on the stochastics and this will not be an easy task. So stay very conservative here until we get a clear signal either way.
Monday will bring very light trading and many times these markets are very easily manipulated by the locals, so if you decide to day trade the market Monday I urge you to remember the potential volatility and keep your stops tighter than usual to protect against thin run away markets.
I hope you all are having a great holiday season and lets all look forward to a healthy and profitable 2008!
Please take a look at the chart below as it really sets the tone for what is currently happening in stocks.