3/22 Daily Commentary

XMI is holding on to January highs by it's teeth.  1190 vs. 1192.77 Thursday vs. 1192.66 today.  If primary wave 2 is finishing up the end of expanded flats should be complete at this point.  A turn down naturally should commence.  I am flat in the model positions because I1 is moving up until 4/2 to a target peak just above 4, which is far below the buy signal level of 5.5.  The rules state that I either:
a) buy in accord with I1
b) sit on my hands until 1 of the following occurs:
    the I1 uptrend ends (April 2 is the last day)
    short only when DJI falls 1.2% below it's 5-minute, 380-unit M/A which at this point is 10,595.
Here is the I1 with a DJI chart:

This is an interesting juncture because the short-term trend SPX 15-min, 54-unit M/A is still on a sell signal from Friday's decline and blue chips are pressing against January highs.  The sell signal will be neutralized on a rally past 1168.50.

If I had the freedom to bet I would take a flyer shorting at this level.  If only...I do not.  The rules are clear that I must await the decline.  But wait... I have a cheat!   Silver broke beneath a shelf of support at 16.85 last night and rallied back with the stock market to important resistance approaching $17 May futures.  Here is May silver:

So, silver has a positive correlation with the stock market (a temporary phenomenom due to Mad, Mad, Money flooding the world financial system.  Silver is on a sell signal from it's sentiment indicators,  SI12 and SIbars.

Here is SI12:

I went short silver today in a small way and will expand the position tomorrow on weakness.

On a longer-term note I believe that 4/2 will be the top and the start of the 5-year bear market in stocks.

4/2 is a sell signal with a low below 3. It is important to enter into this move, exit 1/2 from 4/13 to 4/22 and wait for one of the following to re-enter the other 1/2:
a) a downside break of the 5-min 54-unit M/A (.56% below it is the flashpoint)
or
b) 4/29, the I1 top