Market Commentary – September 22, 2009
Reading my commentary, it’s clear that I am suspect about the continued rally in equities. I have been out of the market since roughly January of 2008. My only ventures back in were to take aggressive short positions and those were quite profitable. I guess the obvious question one might ask me is “when will you change your mind and jump into this ‘new bull market’.
I thought I would answer that by inclusion of the following chart of the SPY, my proxy for the S & P 500. 
I have drawn a hypothetical line of what an appropriate bull market violation of the current trend channel should look like. As my drawing shows, pretty soon the market should take off to the upside and violate the upper channel line. Once this happens, any downward correction should be supported by the trend line as it acts as resistance. Additionally, I would expect the key Fibonacci levels to be tested and worked through by the bull market. As the chart shows, the current rally has been contained quite nicely in a trend channel made from connecting the March and July 2009 lows and then drawing a parallel line above at the May 8 2009 high. If this rally is truly the next bull market then I expect this trend channel to give way on the upside. As long as the trend channel holds this rally it will “look and feel” like what I believe it is…a correction of the dominate downward “bear” trend.
So, as before, I sit and wait it out. In the meantime, I am focusing on making money in other markets that are a bit more clearly trending.
