9:15 AM - The market has not picked a path right now. We are in a news driven market, which means technicals take a back seat to the ups and downs that CNBC is pumping out. There is a half life on news though, so it does not really help that much to follow or chase it. Really at this point, the market is seeming to say, we want a solution to FC and will tend to stay in range until we get it. 

Yesterday had a couple notable things to it. First, volume was way down and price was up. Usually this is a bad sign, since volume shows commitment from big players. Additionally, short term VIX went up, although 3 month did not, and yesterday was overall bullish. This may be a silent warning. VIX:VXV is 93%, so again we remain in a capitulation warning for now. It does not guarantee it, but you will make a lot more money if you do not trade bull in  SPY or inverse VIX above 91%. If you use certain other proprietary parameters I have found, you can trade up to 95%, but nonetheless we are in a warning zone. It's not fun to sit out, but it is not enough for the market to go up. It must go up under the right parameters. It does and will in normal markets, so there is still plenty of money to be made. Remember we invest, we don't gamble.

The real bullish accomplishment that the market made yesterday was that it took out the old upper TL in place since Sept's 10% bear correction. It did this during the day, so guess what.... It can now do it again even if it goes under that line. It will still act as resistance, but not as an impenetrable wall. So, today made be a head-fake, as we have seen a couple times earlier in Sept or Oct, or this may stand to break out temporarily. Remember the daily oscillators are way overbought. 

So, what is my advice? Let the markets confirm intentions. Keep an eye on silver and the dollar as a clue. It sort of acts like a magnet for up movement or down movement. (silver can have direct relationship and dollar an inverse relationship) Not every day, but most days. I am sitting in 100% cash for my swing trade and 60% bonds / 40% diversified stock index funds in my 401-K.

Last piece of advice: Remember QE-infinity. This could well be a sell the news event. I do think if Washington gets everything together, which will probably happen, although only God knows when. The market may rally for a week only to sink afterwards. Do not think it is up-up and away. Anything parabolic will have a sharp negative after-effect. It always does.




Leave a Reply.