Today Was A Positive Development

First before I get into the market, I have several emails regarding UNG, I still like the trade, I'd still buy it. The stop on the trade is at $8.08 and unless it breaks that level, I consider it a long position and we are still holding it. Today it pulled back a little past the 10 day moving average, not by much though. It looked bad because it did it in a day, but it's common for the first pullback to be in that ares and the second to the 22 day, this is the second pullback, the first was exactly to the 10 day, so I do not feel that it is a problem at this point.

As for the market, you probably heard my tone last night, cautiously bearish and expecting most likely to see a false breakout, but unwilling to commit as the indicators had been turned around by Friday's options expiration. Today we got the clarity I was hoping for and then some. My fear was that Friday the S&P/SPY calls at $112 (the highest open interest) were possibly being pinned down to make them expire worthless and then there would be the possibility that they'd let the market rise after that. the market had an enormous head start on that scenario this morning and failed miserably, but as I have noted, we saw 2 false breakouts last week alone, now we have a third.

There is some early 3C divergences on the 1 minute chart suggesting early strength, again I do not feel this will lead to anything significant and it is time to start watching for the tell-tale signs of a decline as almost all of 3C timeframes have lined up in all 4 versions and in almost all timeframes in all averages on the distribution side. This is extraordinary to see, it doesn't happen often. We've had to sit through some enormous volatility and drawdown, but I do believe we are close to realizing the trend we have been preparing for.

In the meantime, despite some negative action in the miners, there remains positive accumulation in several names. I will list those long trades tonight, this is not at odds with my bearish market stance, there's always a bull market somewhere even in the middle of a bear. However, these are most probably counter trend trades and needed to be respected for the danger that they can bring in trading against a trend that is emerging so make sure not to over commit, make sure to properly position size and set a wide stop initially (take in fewer shares) to give the trade some space to work. It's not easy to short into strength and buy weakness but that is what is called for right now.

If you are a new member and are unsure of where you stand and what you might want to consider having in your portfolio, please email me and as many members will attest to, I WILL give you the support you need as best as I can as soon as I can.

At this point, unless you feel you need it, the hedging strategy discussed last night is off the table in my mind for the time being. Interestingly, every time we consider starting to hedge, the next day the market falls apart.

It looks like in the early trade, the DOW will outperform the SPY and the SPY will outperform the NASDAQ. That's based on 3C interpretation and only references the early trade, but if there are positions you are looking for, that information may be of some use.

I'm going to add a few more trades to the list tonight and it will be up shortly. Several members are past due on their memberships, I'll try to notify you and I will leave your membership open until at least tomorrow night so you can see the new trades. Because of the blogger format I can only have 100 private readers and we are nearing that number.