12/18 Weekly Commentary

The 11/24 Daily Commentary laid out my expectations for a stock market trading range into 12/21 and probably through January 6 based on I1.  In addition the suppression of natural market forces in the financials has caused me to scale back any positions shorting the stock market. Consequently for the past several weeks I have focused more on commodities.  Currently short gold futures and long dollar futures.  However, I'm currently 2% SDS and 4% QID (added Thursday).  All positions are in the money and the past month has been profitable.  I have updated the Trade History and year-to-date am up 35%, not including profits in open positions. 
The short gold position reflects a market in wave 3 of 3 down with forward sentiment gauge declining until early January.  This corresponds with my I1 low of 1/6/2011.

The dollar is in wave 3 of 3 up with a rising foward sentiment gauge for the next several months.

I1 bottoms at the close Tuesday.  I haven't been shorting this I1 cycle much due to QE and the upcoming opportunity on the long side after January 6.

EWI has changed their count to Primary 2 complete, that is the 5 up from July is complete and the abc from March, 2009 as well.  A look at the above chart shows the market still has legs before Primary 2 is done.  XMI is the only index that has a chance at an ascending triangle to launch this final rally phase.

Here are the I1 values for the next couple of months:

20101201 11.37165

20101202 12.79749

20101203 13.61196

20101206 13.86173

20101207 12.77042

20101208 11.88531

20101209 10.98693

20101210 9.50034

20101213 7.620538

20101214 5.351872

20101215 3.830426

20101216 2.548973

20101217 1.30961

20101220 1.062204

20101221 .8301926

20101222 1.869141

20101223 3.425628

20101224 4.60533

20101227 7.038039

20101228 8.59992

20101229 10.33879

20101230 11.40734

20101231 12.23454

20110103 10.65931

20110104 8.740036

20110105 6.669497

20110106 4.659269

20110107 3.130109

20110110 1.958889

20110111 2.423436

20110112 3.04538

20110113 4.081726

20110114 5.459954

20110117 7.244822

20110118 9.279465

20110119 11.4923

20110120 13.90587

20110121 16.33031

20110124 18.86588

20110125 21.5293