Monday, May 16, 2011

5/16 Daily Commentary

I sold the volatile ETFs, QID and TWM at this morning's market lows pre-opening ARCA.  I replaced the 3% TWM and added 2% DXD when DJI hit it's critical M/A.  I still believe the rest of the market will break down out of it's trading range (the Nasdaq already has and is leading the way).   However, SP futures have tapped their first daily M/A and simultaneously DJ futures have tapped their low recorded last Thursday.  So I'm content holding 4% SDS, 3% TWM, 2% DXD, 1%SOPIX, and 1%UCPIX until the market can show that the blue chips will join tech.

Here is the DJ futures testing last Thursday's low.  In addition, the previous high at 12,405 needs to be breached in order to confirm the downtrend from an Elliott perspective.   The equivalent level in cash DJI is 12,451.  This level is key from an intermediate term perspective.
As stated, Nasdaq has led the way lower and has overlapped it's wave high of 2358 recorded April 1.
So the decline has declined to support and it's fish or cut bait.  I never underestimate the tenacity of a
bullish trend.  

Bonds should continue in their terminal rise.  I plan on using short bonds as a hedge against short stocks.

1 comment:

  1. Steve, I often read your blog but don't post much. Just wanted to say thanks for all the effort you put into this. My thoughts are that the market is far overvalued and overextended and due for a calamitous fall, but given how oversold we are on hourly/daily charts (and still above various support levels) if that fall doesn't happen here, we have stored up enough energy for a mighty bounce.