Weekend Update 12-12-09

There....that should pretty much do it. One whole month of sideways action should now be over and with it the consolidation prior to new highs. So, we could see a blip downward here into the tidal low date on tuesday and then its up, up, up. Not surprisingly I guess is that the high tidal date is none other than Christmas day. Who would have thought that? Why Santa would have, thats who. :)

Mid Week Update

Can you say inversion? A mild one though, but even still, an inversion. I think we usually get two or three cycle inversions in a row, so I'm anticipating a probable low on monday 12/15/09 to get the cycles lined back up again. And I think that would reset other indicators as well.

Mid Week Update

Sure looks like an inversion underway here. When the low came in on the 27th of November that should have been the clue that something was up. Best guess now is that we might peak at the end of this week then go down into the expected high on 12/10/09 or the day before that on wierd wollie wednesday. Just when you think everything is clear, someone shuffles the deck on you.

Weekend Update

An interesting thursday and friday huh? All in all, pretty much a sideways move into friday's high. Lets see how we proceed from here. Bears are calling this a topping pattern, bulls a consolidation pattern. I prefer the latter. You might note I've pulled the uptrend line down to a more shallow angle to better represent what we've seen in the last few weeks. Bottom trendline has not changed for quite some time. Which line gets broken first ?

Mid Week Chart and Thanksgiving

As of this morning, it appears we are climbing up into the day after Thanksgiving high as expected. Though it looks labored at this time, it is to be expected after such a long and steady advance since last March. For that, I am thankful as my portfolio is much improved from a year ago. As much as I feel the need to protect those profits, I also must be cognizant of the strong possibility that this advance is nowhere near complete as evidenced by the continued bearish sentiment which can be found most anywhere in the blogosphere. Let me ask you this, how many purely bull boards can you name versus just the opposite? Lets face the facts, this decade has pounded the bulls and the bears alike....the end result seems to be fear and loathing of the markets in general.

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Enough babble for now. Here's hoping everyone out there enjoys a safe and rewarding Thanksgiving surrounded by the people who really are important ....your family. Enjoy them, for life is indeed short.

Make Me Believe

Bulls have a little work to do next week to turn this trend around. The all too obvious answer is of course a rally into and through Thanksgiving topping out on the day after turkey day, which traditionally I believe is a strong bullish day. But, the boys may have other ideas here just to trip things up a bit. So dont be surprised to see a trend "inversion" where we bottom shortly after Thanksgiving. Sentiment is still in great shape, and we still have overhead targets yet to be reached.

Mid Week Chart

Pre-Turkey 2CS Sentiment

Good time to take a look at sentiment again. Tom Drakes 2cs senticator above on which I've drawn a couple of heavy black lines more or less bisecting the recent sentiment line and the price line. Notice how, as price has maintained a steady upslope since March, sentiment exuberance has actually backed off in the same time period. IOW, as price has remained more or less linearly up, sentiment has gone into a topping pattern and almost looks to be becoming more and more bearish as price marches on upward. We've got a long way to go before this market tops out.

Path of Least Resistance

Certainly feels to be up, doesnt it? Monday we complete a weak downtrend, unless of course for some reason we swoop down to begin the week.....that would be a surprise to me though.

So, what now? Well, I would like to see some weakness on monday to setup the upcoming uptrend into Thanksgiving. The actual turn date from my data falls on Thanksgiving day, but given the propensity for the day after turkey day to be up, I think its safe to pick friday as the turn....besides, we all take the day off and the boys have their way with the market and a full belly of stuffing, correct?

Needless to say, we completed a "seasonal inversion" in the markets whereby the seasonal changes (increase) in tides and gravity have largely been ignored or overtaken by other factors. My interpretation of what that means or can mean is that now with those forces weakening day by day and week by week, we reap their additional boost to the markets. I think we'll see a fairly strong end to November, a decent correction into the beginning of December and then an Xmas surge. All in due time.

Mid Week Update

No comments tonight.....too much else going on right now. Good trading !

Up, Up and Away.....Or...

There are times when this tide stuff just seems to be another smoke screen in the ever daunting task of trying to determine market direction. And then there times like now when it is spot on and like taking candy from the proverbial baby. Guess that's what makes it all interesting and intriguing.

So, we apparently head on up into the 11/11/09 date as a high. Interestingly, the same date coined as WWW by Don Wolanchuk and infamously known for a period of weakness prior to options expirations. So...........will WWW give us a low and the following trend an incorrect tide trend that morphs from a bearish one to a bullish one? Will we instead tag or penetrate the upper trendline as we approach turkey day here in the states? I'm leaning that way, but with some caution. From a personal standpoint, I am probably 75% long throughout all personal accounts and 401k, waiting for a signal to either go further long or take some off the table. I think the next week to two weeks will tell a lot about where we head for the next several months. If I were a betting man, I would say we trend up from here into mid February 2010.

Mid Week.......Yeah, Update

Sometimes words are not needed.

Path Forward

Before off hours futures starts trading this evening, I thought it'd be good to get some thoughts and possibilites down on paper so to speak. Regardless of where I think the markets are eventually heading, I think we're at a critical juncture right here where a couple of different scenarios could play out.

First, given that the market is down right here, the possibility exists that short term they will continue on down into the tide turn date and possibly into the bradley date with some accelerated selling. Call it what you want, a strong correction or a mini-crash, it's a possibility that should not be ignored. It's been a great run and opens up the chance to rape the bulls relatively easily at this point. So, if we get this, that opens the opportunity for a good buying spot into the second or third week in November.

If, on the other hand, we get mild selling or even sideways action into the wednesday tide turn date or the bradley date, followed by a correct tide uptrend, then one might expect at the end of that trend, the following down trend could be one to be very wary of if you are a bull.

To summarize, I think caution is called for in this period to see how the markets want to handle a likely and needed correction.

Trick or Treat, Huh ??

Aha, a little trick for the bulls, huh? Halloween goes to the bears, but ultimately, who cares? With my portfolio up well into mid-double digits, I have little trouble giving some back for the next bull onslaught dead ahead. Oh really, you might say? Well friggit, let's look at some evidence. But first, where we stand currently at the end of October, you know that scary, bad for the market, portfolio eating month of October ?



Where we are is pretty much exactly where we would expect to be....prior to a tide low mid week this week. And, we have a Bradley date shortly thereafter pointing to a turn. And we have bears and even weak handed bulls looking down, down, down. You suppose the markets going to accomodate all this bearish sentiment? Highly doubtful, for as we all the know, the markets will never make everyone rich nor even happy, so forget about that.

Take a look at Don Wolanchuk's clx chart below. Here is plotted the 3dma, 10dma and 30dma of the clx as well as the vaunted aydis all along side the relative movement of the dow.

All indications point to higher prices and in short order. Not shown here is the fact that in a couple days (tuesday or wednesday) there will be negative numbers falling off all these dma's such that the averages will surge upward and so will the market with it. You see, each of these averages mimic the dow in particular and the markets in general. For those not familiar with the clx and wanting a short and sweet primer, here it is. The clx measures the stock inventory that the market makers have on hand at any particular time. See, I told you it would be short and sweet.

On to sentiment. Tom Drake's 2cs in particular is plotted below. With end of week action, sentiment has gone over the top as bear froth abounds. Notice how the 2cs has plunged as the vix and p/c ratios gone out of sight. Great fuel for the upcoming blast.

And last, where are we heading? As it now stands, we've only taken out 2 of 7 targets to the upside! See chart below where the 1,100 has been hit but there remain 4 plum targets in the 1,200 zone and one way up there at 1,400 which will get taken out sooner or later. My guess? 1,200 falls easily by the end of the year....1,400 by February/March timeframe. Who knows what additional targets will develop on the glorious journey up? You know there will be blips and beeps and corrections...just keeping my eye on the most important ball in the game.

Sooooooo....short term look for some weakness early next week before everything gets back into alignment.

Mid Week Chart

Watching closely. Quick to the bottom trendline, lets see if it holds here. If previous "scheduled" turns during this bull run remain true to form, there should be a 1 to 2 day earlier than expected turn, so maybe Nov 3 or Nov 2 (tuesday or monday).

Clx with Some Tide Mixed In

Responding to Joe's question below, this chart is a plot of the actual Eastport tides (lowest tide) each day along with Don Wolanchuk's 3 dma of the clx. I wont get into the clx here and now; it is a subject that requires quite a bit of explanation. However, I will say that it marrys and mirrors the tide stuff pretty well.

Anyway, getting back to the subject....You see the black arrow pointing to todays extreme level of tidal swing....what this particular point represents is the highest elevation of the lowest tide in quite some time. In other words, todays tide level (lowest tide for the day) is higher than at anytime for quite awhile. Taking this a little further, we are at a point where the moons gravitational pull on a seasonal basis is low, low, low......we should coincidentally, if you believe low gravity equals higher market prices, then we should be at or nearing a seasonal top........food for thought and a reason for my caution. I know this was short and sweet, but it's a monday....lol.

Let me add that this hypothesis needs additional thought and work, so dont bet the farm on it!

Weekend Update

Lots of sideways up and down action. Will need a strong monday to make this trend good. Though not shown on this chart, Oct 22, 23 was a Bradley turn date and monday the 26th is one of the strongest tide dates seen in awhile. Turn imminent or another setup to pull more bears back into the market? I moved a little money from small caps into large caps and added a little into bond funds last thursday in my 401k. May make some more adjustments this week depending on monday's action most likely. Still have some unfilled promises in the 1,200 snp range, but may have to wait for those to be hit.

Mid Week Update

Last week's downtrend whimped out into a sideways move and we're now back into a tidal upswing. Projected top of this trend is next monday, 26th of October. This date, by the way, has some tidal significance in my work and will require special attention when it rolls around. I think right now it will form an intermediate high of some significance in this rally, and will likely result in some lightening up of long positions on my part, and potentially taking of some defensive positions. Just an indication from my charts, not a recommendation in any way.

Hoping to get back to the trading aspects of the tides before too long. A project looms in this respect to attempt to prove or disprove the reality of trading the tides with eminis as the trading vehicle. More on that later, probably in a couple weeks as family is beckoning this weekend. Trade well and stay on your toes, particularly in this timeframe.

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. :)