Friday

Cmon Get It Up!

Our indicator has been triggered, usually it is early and does not exclude a double top. We are going to play it as if markets will be going for a double top (it usually does as it is the most deceptive play which sucks in both bulls and bears). The bears like us would be shorting in the last few days with Greece, Spain-news and most likely would have a stop loss at the previous top (since breaking previous top suggests the conventional thinking of higher high). The bulls would be buying the dips now. A quick break up will create a stampede - support will then be at previous high (hence longs will have their stops clustered slightly below this). Playing as if the top is here, we will short at the previous peak, and will add on to shorts as markets go higher. Note the bulls have targets on the Dow for 11600 to 12000.

Our indicator is currently at the upper end of the channel since 2007. For markets to continue going up would mean a continued divergence between our indicator and markets. Not impossible. But we feel that even for that scenario to occur, markets will need a more significant pull back, followed by a stronger rally up. This will allow our indicator to move down, and gives it space to move up again. We will post an updated chart later time permitting.

See you all in the battle field.