I’m using any rallies to scale out, take profits and /or get short using inverse ETFs like [[SKF]], [[SRS]], [[DXD]], [[SZK]], and [[FXP]]. Do not be fooled by a reflex bounce. This market is going lower. The charts don’t lie.
Yesterday, the NYSE Bullish Percent Index, a measure of the percentage of stocks on the NYSE that are on buy signals on PnF charts, turned negative. The index fell to under 49%. It has now reversed from X’s to O’s on the chart.
This is signaling a longer term reversal in the market trend since the April Fools Day rally. Generally, these trends may last for several months. We now have an inflection point established, and it is pointing downward.
The best thing I can do right now is to follow my discipline and take the signals I’m getting. I trust them. I’m not going to get cute and try to out guess the market’s direction. Nobody knows exactly where it’s going, anyway, least of all, me. I think Trader Caddy said it best (and I paraphrase), “listen to the market…it will tell you what to do”. That’s some of the best advice, and something that I’ve always subscribed to.
It may be worthy to note that in the past year, the NYSE Bullish Percent used in combination with some of my proprietary indicators have been useful in signaling an inflection point in the market.
06/11/08 Bearish
04/03/08 Bullish
10/31/07 Bearish
10/01/07 Bullish
07/22/07 Bearish
03/29/07 Bullish
Also, take into consideration that support for the Dow is in the 11,700 – 11,800 area. Were this to be violated, we could be headed for 11,200.
If people are thinking that bonds are a safe haven right now, they may want to think again. The Dow Jones Corporate Bond Index has also fallen, down to 100.75 yesterday from a reading of 102 last week. This move broke a double bottom on the longer term PnF chart. This is negative for bonds and another sell signal. The shorter term chart also indicated a sell signal at 101.25, breaking down through a spread triple bottom. (Unfortunately, my sources for the chart are going homo on me, so I am having trouble posting. I’ll try to update later.)
I will also continue to look at scaling into [[USO]] with some of my money, using pullbacks to add. to the position. I think we’ll get to see $150 oil this summer.
Finally, [[DBA]] is a good way to play “milk the farmer”. It’s high carb allocated 25% corn, 25% soybeans, 25% wheat, and 25% sugar, so fat fuckers may want to go easy on this one. The past three months, DBA has been shit on by city slickers, not realizing that people have to fucking eat sometimes. Recently DBA has broken out to the upside, busting loose through a spread triple top yesterday. Weekly momentum is now positive.
Disclaimer: This information is not intended to be used as the primary basis of investment decisions. Because of individual investors requirements, it should not be construed as advice designed to meet the particular investment needs of any investor. Consult your financial advisor prior to taking any actions. The information and opinions contained here are those of the author and are not necessarily the same as those of iBankCoin, its principals or its affiliates.
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