Weekend Update, Another Look at 2CS

Where are we? Well, it appears the Oct 12 turn date was blown out of the water by this bull market as if it never existed. Or has it? Upcoming turn date is monday the 19th which is supposed to be a low.....very possible it could still happen. Since we had options expiration last week and friday was a down day, I suppose you could make the case that options expiration adjustment began friday and another down day or two would do the trick.

Technically, if the ES prints below about 1,075 on monday, this downtrend would be correct, though just barely. So, can we expect the uptrend to resume on monday or even tuesday? I think the answer is yes. Lets take a look at sentiment. Below is the Tom Drake's 2cs updated through last friday.

Although sentiment is approaching the trendline, a reasonable interpretation would be that if this is the start of a bull market, sentiment has room to grow as evidenced by the behavior of this indicator in 2004 through 2006 bull market. But, maybe it is different this time.

In The Grand Scheme of Things

From Carl Futia's (http://www.carlfutia.blogspot.com/) book, "The Art of Contrarian Trading" comes the plot above which is the SPX monthly with a 4 year or 48 month simple moving average overlay. Carl uses this very simple graph to get a grasp on whether the market is under or over fair value. Price below the moving average indicates below fair value and vice versa. Just another tool for the toolbox. :)

Tide Update

Just a quick look at where we are this sunday afternoon. Expected high tomorrow (monday), but keep in mind we have options expiration on friday.