What an exciting week this has been.
A nice 10% up move in the markets and yesterday the Nasdaq closed green for the year but we’ll have to see if it lasts today. We went short into the close, 60% bearish as two days in a row of pumped-up closes was just too much to…. bare. After a near 25% run off the bottom, a 5% correction would be good and healthy and we’ll be looking to hold the samelevels we set on the way up on this pullback – those would be: Dow 7,636, S&P 805, Nas 1,525, NYSE 5,075 and Russell 420, roughly 15% off the bottoms with 5% rule adjustments.
Our dollar adjusted breakout levels remainDow 8,000, S&P 847, Nas 1,585, NYSE 5,321 and Russell 456 but be aware that the dollar swings wildly almost every day and I am far too lazy to keep adjusting those levels so roughly there is what we’re looking for.I already sent out an alert to members this morning pointing out that the dollar was being forced up at the EU openandit seems to be moremanipulation aimed at supporting US equity charts for another day as the declining dollar boosts the relative value of the stocks – I’m not sure it will last as it’s very expensive to keep the dollar down.
They have literally thrown everything but the kitchen sink at the markets this week to get a 10% gain into the end of quarter (IF they can hold it together that long) but, what next? For the first time in a very long time I’ve called for raising cash as we’re heading into some very volatile earnings and I’m really not expecting us to break our upper levels, now just 2% away, without considerable effort. Balance is usually fine but sometimes the flexibility of cash is a big help!
I’m not bearish per se- I still think the market should settledown back around our old8,650rangeafter earnings but it will probably be a wild ride getting there. While the economy is better than you may think (see very cool chart)-charts dostill rule. If we can’t break our top levels by next Wednesday, we’re much more likely to see AT LEAST a 50% retrace of our gains off the bottom. That’s why I like a little more cash here, huge drops can blow our your hedges so better to have cash on the side to take advantage…
