A GREAT DAY!

I know there's a few emails in need of responses and I will get to them, my wife has been stranded on the side of the highway since 2:30 so I need to pick her up and then I'll get more in to the market and your emails.

April 10th as the SPX had already broken support and the 50 day average (I don't much care about moving averages, but technical traders do, therefore Wall Street does so we need to watch them), I said I had a gut feeling we would see a very volatile shakeout bounce and probably the last one. Later on April 10th, 3C gave us the accumulation signals on the short term charts that suggested that bounce was coming. I said "There's no reason to run this bounce if it doesn't shakeout the shorts". According to Technical Analysis dogma which as members have seen, is used against technical traders every single day by Wall Street, the emotional state of traders (remember price charts are just representations of fear and greed) would have been quite pessimistic as their long honored 50-day average was broken. 10 years ago I'd be inclined to short the market then and there, but we have seen the manipulation of technical analysis too many times to do something foolish like that.

Since then I have shown you at least 4 different volatility charts showing volatility has increased by over 100% since the February trend grinding higher. Volatility is not associated with consolidations as the buy the dip crowd, who have been throughly brainwashed over the last year would hope, volatility is associated with tops.

So what were technical traders looking for? They were looking for exactly what technical analysis has taught for nearly a century, they were looking for a snap back bounce to fail at broken support (resistance). This has always been taught to traders as the high probability/low risk short scenario. The trend we have observed says that the test breaks through resistance and therefore takes out more shorts, gets the buy the dip crowd excited (their time will come next) and positions everywhere are flushed out. You have to remember that hitting stops, triggering limit orders and such are big revenue streams for Wall Street on volume rebates so whatever can be done to shake out the most traders, create the most volume, is generally what will happen.

A day or two ago I posted the charts of the major averages and where I thought they HAD to go to make any bounce off the 10th's lows worthwhile, they looked like this...

 The green arrow is April 10th-the Dow needed to break above the red trendline, yesterday and Friday we were at resistance, yesterday it looked like the test was going to fail. I said I am not ready to call an end to the bounce because it simply has not done what we expected, it had not broken above resistance as it has today. I'll take a look at today's volatility later, but I'm assuming we are probably close to some records for the year.

 The NASDAQ has broken above the first level, the NDX has been a laggard as we expected for the early part of the move, Financials had stronger positive divergences than tech, THAT CHANGED YESTERDAY and the gut feeling that Tech would take over leadership (which I said yesterday would require AAPL) was confirmed yesterday with the positive short term divergences in the Q's, Tech and AAPL as well as several other tech names. I have received several emails from some of you who played the tech bounce by opening positions yesterday-congratulations! As you know, I try to give as much one on one help as I can, but I have no desire to be a guru, but a student of the market offering any insights that you can apply yourselves and again, I am proud of you all for going against what market dogma suggested and doing what does not come naturally or easy and many of you saw a nice pay day today for your thinking out side of the box. This is ultimately my greatest pride and joy from working with all of you.

 The IWM "overall" looks the worst (it shouldn't in a risk on move), the 50 day may be a target for the IWM, but it is not where I'm most concentrated.

Finally the SPX, it seemed the bounce might have failed to some, it didn't, it has now done what we expected on April 10th. We are moving exactly in the right direction!