Tuesday, September 21, 2010

9/21 pre-open

FOMC day.  Normally a day I try to stay light.  Housing starts up 10%.  SP and DJ futures 3-waved up. I expect a trading range of 1135-1139 SP futures until the FOMC announcement 2:15.
Up until yesterday afternoon I have been trading in order to minimize overnight positions, awaiting the break of the 30-minute, 92-unit moving average in SP and DJ futures.  That break never came.  Yesterday discounted a FOMC outcome that will not materialize.  They will do nothing and their language will not change.   I came into today with a larger position than I have held since I entered on the I1 top 9/10.  9/13 held a slightly lower value but could be considered a double-top.  The stock market held in a trading range for the next 5 sessions.  Monday's trading was a breakout and I went short DJ and NQ futures at DJI cash 10,690 and an addition 5% SDS at the same level to bring me up to 15% SDS currently.  I'm down 7 points on the NQ futures and down 65 points on DJ.  My stops are over yesterday's high. 
I am convinced that yesterday's high marked the top of the rally from the August 25 low.  I1 is declining on a formal sell signal to a bottom below 2 at the end of this month.  It will continue to decline into mid-November.  The Daily Technical Composite is at -10, or it's initial sell level.  The market would have to run away to achieve the next sell level of -22.  The stock market has never run away to the upside during an I1 formal sell signal when the downward move was smooth (that is, uninterrupted).  When an I1 downmove contains brief upticks the market moves up during those brief periods, sometimes explosively.  I'll post the I1 chart as part of this talking point.  The move down into the end of this month is smooth.

  Here is the Daily Technical Composite:


  1. I bought some shorts yeaterday as well puts on NFLX BOUGHT SOME DXD and some sds...Am looking for a nice pullback as well into November as well.CHEERS AND GOOD LUCK

  2. EWI says it could go as high as 11,580 SP to complete - is that too high for you?

    I hope the I1 smacks this market down prior to the FED but with all the small sharp spikes up we have experienced it is hard to be optimistic on the markets pessimism.

  3. Chart: ES and ZB
    Appears that the writing is already on the wall. Good luck!

  4. Hi Steve.

    I saved your I1 values from last week, to aid my timing..these were the 2 lowest I could see
    20101026 -6.125878

    20101027 -6.012274

    Can I ask please, do the values change, or are they fixed. And are there lower values after 16th November,which was as far as the dates went.

    Many thanks.

  5. Hi Gary
    The values within 3 months of present are fixed. Further out they slowly utilize extrapolation/interpolation. They are reasonably accurate 5 months out.

  6. My current favourite chart...

    I have been literally licking my lips looking at this beauty.


    Come on Ben, do your worst! He'll give them nothing, but a big fat load of gloom and doom, whilst his banking buddies unload en masse, either now, or over the next few days.