Back to the Bottom (of the range)

I’ve been warning you for a few weeks now that momentum in the market has stalled out.  Many weekly time frames were looking ripe for a pull back if not a complete end to the rally, see $AAPL.  Market leaders have been slowing getting picked off, one by one, like apples from a tree.  Traders started to make calls of a melt up once again, every time that happens we get a pull back.  Dubai shook us up a little, then we saw a few bear traps above important resistance, and now this morning.  I’m not trying to blow the situation out of proportion, we are only down 90 basis points on the $ES_F at 8:45 AM the time I write this.  But we are trading below important support at 1098 and the 20 day moving average.  I am very confident that we now move down toward 1077 which is the location of the 50 day moving average.

The US Dollar sits at a major cross roads this morning, located right on the 50 day moving average.  In my opinion it will decide which way we move out of this range in equities.  I believe we’ve seen an intermediate term low in the $USDX.

My momentum book is +30% cash and my only trading position is in $GLD which I will hold until it makes a new 20 day low.  Continue to trade small until the market shows its hand.

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