Friday, June 10, 2011

6/10 Weekly Commentary

I exited SDS at 22.08 and 22.25 and short Euro ETF at 17 this morning.  I've held steadfastly short since top day and everybody wants the downtrend to morph into a crash now.  The technical composite indicates a rally to relieve the oversold condition by advancing to +20 today. 

The DJI is at it's 150-day M/A and Nasdaq is almost to the 200-day. 

Looking at the short-term timing chart from the 11:05 posting I stated that an 8-day lead fits the data best.  If so, then today or Monday is bottom day.

The background of the market decline is definitely "risk-off" as indicated by the iboxx high yield index.  This has reached it's 4/15 low, which should provide support.  It broke it's 175-day M/A decisively and I expect a rally to re-test this M/A.

The dollar and silver played their parts.  The dollar almost reached 75 today and I consider that the limit of the initial move.
I have a short-term timing series for precious metals, in addition to the PM1 (which remains in a downtrend).  Silver has retained relative strength to the stock market and I believe will rally with gold if the stock market rallies next week.  This short-term timing series indicates rally.

Consequently, I sold ZSL at the close for 17.80.
I realize that human nature is to look for a killing, but I have enough evidence to justify taking profits and waiting for a good bounce.  We have had 6 consecutive weeks of decline with only 1 decent bounce (which I took full advantage of).   I would expect Nasdaq to come down to it's 200-day and rally (futures are only 5 points away).  
I now hold 1% SOPIX and 1% UCPIX.


  1. steve, I know you like to trade, but the low exposure you have now would indicate that you are not terribly concerned about this mkt getting away from you on the downside. How much downside do you see between now and the your projected upturn, which I thought you were projecting for Nov?

  2. Steve, I thought I would share this: I found a remarkable similarity between 2007 and 2011 Tops: in both cases last bullish wavecount was tired and made only 3 wave up, not 5, to the top. Then we had a correction which ended with a vary bearish bog black candle, followed by a 10 day rally. If the similarity continues I would expect a rally up to the middle of the big black candle of June1, then a crash.
    Sentiment is too bearish, and AT THE SAME TIME, VIX too low - no panic yet - for the market to continue straight down:

  3. Steve,
    I agree with you it looks like the markets are ready for a short counter-trend rally here. We had 6 straight down days followed by a big one day spike. We've had 6 straight down weeks...follow the fractal pattern w/ 1 big week up? The weekly RSI(2) is around 1..a short term return to the mean indicator. The DeMark timings show tomorrow is the last day of the down most likely to set up a one to 4 day rally. We are still, however, in the 1 to 4 *month* weakness zone from the end of May sell I got for all markets. Seems to line up pretty well with I1!

  4. Charles, thanks for comment. I'll research DeMark. Seems to work well for you.
    Carl, I'll check your charts. Thanks.
    My 2011 forecast calls for the initial low in August. Longer-term I1 calls for an election year low second quarter.