Sold stock short ETFs early Friday on XMI breakout from its trading range. The impact on my portfolio was 1% because the exposure was only 15% of capital. Besides the fact that I like being flat over weekends I am hoping for 1 more high in all major indices. By affording myself the luxury of a day out of the market I will look at conditions in an unbiased manner over the weekend. The negatives are profound: the I1 is still pointing down, the world financial condition is crumbling beneath our feet, the SPX cash has just double-topped with January, and the technical condition of the market via my technical composite is at a sell level (-18). I was squeezed out because I believe the XMI breakout was no fluke. XMI does not have a history of false breakouts or traps. Ideally, a spike Monday above Friday's high of 1153.41 would flush out a lot of short and would give us a selling opportunity at higher price to carry to the expected 3/19 low. On the other side, there is a 100-ton weight hanging over the stock market. A lower trend over the weekend would need to carry S&P futures 11 points down to trigger a sell. Since my thesis is that the decline will accelerate I expect that the initial declines will be orderly.
The current I1 char and the SPX:
Finally, gold is at $1100 round-number support, has completed a 5-wave decline, and thus looks set for a bounce-back rally out of a congestion area that should last about a day and recoup about $20. This should provide a tailwind for stocks.
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