3/11 Daily Commentary

I came in long YM futures and with 6% SSO.  I was stopped out of the YM for a tiny loss when the quake occurred.  Not knowing the extent to which the tsunami might impact Hawaii or west coast I sold 2% SSO for a tiny 20-tick hit.  I was successful buying NQ futures and sold them when the SP futures 30-minute M/A was hit.  I waited for the market to rally to DJI critical M/A and sold 2% SSO.  Now the market is above the 30-minute M/A but still below the critical M/A.  The only time that I can expand a position beyond 6% is when I am on the right side of the DJI critical M/A which closed at 12,083.  Any time DJI trades 1.35% beyond this M/A puts me on the right side of the trend.  Currently this is 12,265.

The positives are:
I1 rises smartly into 3/25 and remains at a high level generally until mid-May.
The 50-day M/A held for SPX and DJI
We are on the right side of the 30-minute M/A

The negatives are:
We are on the wrong side of the DJI critical M/A
Charts look toppy which encourages selling on rallies

Technicals are neutral
Elliott wave count is either Minute 4 in progress or the entire shebang from 3/2009 is done. I1 favors the Minute 4 triangle count, which is complete.

Obviously I would like to see the DJI critical M/A punch through it's envelope, but I'm going to remain at a maximum 4% SSO until I see it.  Monday I'll look for an SSO long entry around 51.40.  I sense that many traders were short on Friday's cash indexes trading below the lows of 2/24.  That was not mirrored in the futures with those lows holding.  The quake seemed to validate the short trade and I suspect many were caught in a bear trap.  Going into the weekend with only 2% SSO and 2% TLT.

I1 is up until 3/25 but remains at a high level until mid-May. So until 3/25 I can trade only the buy side. After that I'll trade both sides of I1 until mid-May when I'll go short for the distance. Being repulsed by the financial chicanery employed by the Fed and Treasury, I find it distasteful being long the stock market. However, I cannot ignore this clear I1 bullish environment through 3/25.

The dollar ran into it's 90-minute M/A and, in spite of the overnight stock decline, could not overcome it.  It requires .55% 90-minute close above it to escape.  The EC 90-minute mirrors it.

As a reflection of the financial terpitude the precious metals are not due to seriously decline until after mid-May.  This may not mark the absolute top because of a plateau period in the PM1 sentiment gauge starting next Wednesday.  However, I don't need the absolute top as long as I am short at a secondary peak with a decline directly ahead.

I'll be shorting the Euro Sunday evening.  I see one more minor high to complete a 3 up.