Saturday, June 13, 2009

Stock Rally Severely Exhausted; June 13, 2009

The stock market rally is severely exhausted. The market cannot push higher over the past week, breadth continues to deteriorate, the small cap and tech indices are showing more weakness than the blue chips suggests people are exiting their "risky" assets, momentum indicators did not confirm the recent high in the stock market and several other indices did not confirm that high in blue chips. Usually when the market closes with NYSE breadth negative and the Nasdaqs and blue chips are mixed up and down it leads to a sharp decline shortly after. Well not only did we have that action occur Friday, but it's happened 3 times in a little more than a week! Again, this fractured non-confirmation failure to push higher is signs of extreme bullish exhaustion.

I still await a strong break of the trendline and ultimately a break of that 5 wave rally on Thursday which I feel was an "ending move". Once this occurs, we can be all but assured that a significant top is in place.

I'm short 65% total strength with the SDS (ETF) and a small bear put spread on the SPY.

EUR/USD Declining Impulsively; June 13, 2009

The hourly EUR/USD chart shows a five wave decline and a three wave WXY rally that halted twice at the fibo retracement level. With a stock market top at hand and gold reversing sharply Friday, I like the odds of shorting the EUR/USD here at 1.4015 with a stop at the beginning of the 5 wave decline at 1.4345.

Thursday, June 11, 2009

Still Waiting for Trendline Break, Evidence Building of Significant Top; June 11, 2009

The market did a sharp rally today on the Treasury auction news and then reversed at the close. In my 15min cash S&P chart posted above you can see that the rally starting yesterday and ending today created a 5 wave move. This can often mean an 'ending move', such as a thrust from a triangle, for the entire rally over the past few months. I still await the ascending trendline on the daily S&P futures chart (posted above also) to be broken to the downside and closed beneath it. Until then I cannot be certain a top is in. Right now, things are looking good though. A break of the beginning of the 5 wave advance at 928 in the cash S&P would be the first significant signal that a top was in.

Wednesday, June 10, 2009

Trendline Holds.....for now; June 10, 2009

The trendline was broken midday but could not close beneath it on the daily charts. This tells me the market is short term bullish until a strong break and close beneath the trendline occurs. Regardless, any rallies should be short lived at this point and capped below the 1000 S&P futures level. The sideways action is "triangle-looking" which means one more sharp rally to a new high before a violent reversal. That will probably occur and take out the weaker bears before this market finally declines like I've been projecting for weeks.

Bottom line: the market is short term bullish as long as it trades above the blue ascending trendline drawn above on the daily S&P futures chart, and any rally should be capped below the 1000 level.

Tuesday, June 9, 2009

Break and Close Beneath Trendline Needed Soon; June 9, 2009

Above is a daily S&P futures chart that shows an ascending trendline that has been resistance and support several times since November of 2008. Obviously the market thinks this trendline is important. Right now the market is trading above it, but is having a very difficult time with any follow-through to the upside. Strong break and close beneath the trendline this week will signal the next decline phase underway with an immediate target of 875, and possibly much further.

The sideways action in the market is not encouraging for the bears because this might prove to be the 3rd time in a row the market corrects itself by moving sideways instead of down. Half of my full position will stop out at 958 in the S&P futures.

Monday, June 8, 2009

Top in, Monday Should Bring Selloff; June 7, 2009

I'm quite confident a top of significant degree is now in on the stock market. I expect the futures to hold overnight down mildly, or even up slightly into Monday morning's US open. Either of which should bring about a good selling opportunity with a stop loss at Friday's early morning highs.

This market is bearish and should fall Monday, and possible most of the week.

I'm heavily short as of Friday.