Was Blind but Now I See - Amazing Grace, circa 1779

5:31 PM

It was one hell of a day!  DOW up 490 points or 4.24%, and closed over 12,000.  Volume was up big on the actual indices but not earth shattering on the DIA and SPY as one would expect from such a big day.  That leaves me feeling a bit queasy.  So we need a strong follow thru to confirm this move.

Back to the headline.  Yes, was blind but now I see.  Or hell, maybe I'm just hallucinating!  It's anyone's guess.  But here's my "musings".  Two up days that are unexplained technically, unexplained fundamentally, and unexplained by news.  For no reason that I can fathom the market rallied Monday and Tuesday.  And.....how did I say it......oh, yea..... on crappy volume.  Today suddenly the fog lifts and I can see clearly again!  This central banking deal was in the works.  It didn't appear out of thin air! This took some time and cadres of people to coordinate.  I feel like the deer in the headlights, wondering why I didn't the following possibility Monday and Tuesday.  The "smart money" knew what was happening.  The insiders knew.  People who know people knew.  Hence the low volume on the Monday-Tuesday rally.  Getting in early to reap the rewards of being "in the know".  Today when the news hits they go all in.  A huge gap up is created and profits zoom filling the coffers.  The media jumps on it and adds fuel to the fire.  More profits for those "in the know".  

One has to wonder why the announcement was made "pre-market".  Why not wait until after the market opens?  Hmmmmm.  Can you say gap up?  Another interesting aspect is that all this occurs on the last day of the month!  Hmmmmm.  Why not wait until December 1st?  Someone needing to report less than expected losses?  Someone needing to make the end of month grade?  I wonder who?  Hmmmmmmm.  The timing is just too convenient.

And this news of central banks working in concert is nothing but a thin veil over a big problem they cannot fix.  It's a temporary fix and nothing more.  It will supposedly give time for the politicians to do their job.  Something they have refused to do for years now.  Do you really think they will do it this time?  Do you think Euroland leaders will act?  Don't count on it.  It's took a meltdown here in the USA to get something done and since then Congress has accomplished nothing to speak of.  Let me say that again.  Congress has done nothing to prevent another meltdown here.  NOTHING!  If that doesn't scare you, it should.  Things that were put in place after the great depression to keep it from happening again were slowly repealed.  And nothing has been put in place to prevent another meltdown.  I won't even talk about the loss of the uptick rule.

At best, the central banks are are placing a band aid on the problem and enabling politicians to continue their poor behavior of "doing nothing".  I do not think Euroland will make any substantial moves to fix this problem until things start to collapse as they did in the USA.  After all, if we were so blind, how can we expect them to see?  Maybe we should sing Amazing Grace for them!  LOL

So here's the technical take with the caveat that it's a news driven market and technicals just aren't working well.  The DIA and the SPY are back in the channel.  And the candlestick is clearly a bullish candlestick.  Looking at the charts the momentum is UP.  Perhaps that's the new nomenclature.  Market Momentum, not Market Trend.  So today, while I ponder this change in wording, I'm not publishing the "Current Trends".  Rather I'll simply state that the Market Momentum is UP.  But watch closely.  I would suggest that anyone looking to unload a few losers use this rally to dump 'em on the first sign of weakness.

Market Momentum - UP

Here's the charts.

OUCH~! They Threw a Party and No One Came~

7:08 PM EST


READ ALL ABOUT IT!
Consumer Confidence soared to new levels hitting 56.0 for November from 39.8 in October!!!!

READ ALL ABOUT IT!
Everyone was relieved that Italy's bond aution showed that they still could raise money to keep the wheels greased (albiet it at a rate of nearly 8 percent).

Yes, even though experts were only looking for a jump to 42.5 the Consumer Confidence number for November was 56.0  Who are these "experts" anyhow?  I mean really, Black Friday was a success, and they were that wrong?  Hey, if my mechanic was that wrong I'd fire his ass!

And Itlay sold a bunch of bonds raising the capital they needed.  Everyone sighed with relief.

The DOW responded by ZOOMING up a WHOPPING 32.6 points!  OMG~  What a rally!!  And volume on the DIA was an incredible 5,325,918!!  Sounds good until you notice that 5,325,918 is only 53% of the average trading volume for the DIA.  The SPY didn't fair any better.  It hit 74% of trading volume but price didn't move as much.

Why the emphsis on volume?  It tells you if people are trading in droves or if not one is trading.  Think about it, at the end of the first week, people aren't standing in line to get iPhones anymore.  Eventually, lower demand means cutting prices to get people in the door.  Same in the market.  It's no different.  Volume dries up at the end of a run.  And when no one wants to buy, the prices are cut as everyone begins to sell.  Maybe in a year you'll hear someone muttering...... "Yea, this iPhone 4S does kinda suck".

This little rally of Monday and Tuesday is on crappy volume.  I heard one pundit say it meant the "retail" investors weren't getting in.  Retail hell, no one is getting in here boys and girls!!  Look at the chart below and consider the drop in volume.  No one wants to take a risk here.  Everyone with a brain is thinking........this is prolly the top of this little 2 day run, and we only made it to the 4th floor.  Damn.  None the less the elevator operator is screaming "BASEMENT!"

Until some politicians get off their egos and actually acomplish something Europe is bust and the good ole USA ain't far behind folks.  Bill Gross of PIMCO actually came out and said it on national TV.  The elephant in the room has been identified again and I bet the general public missed it.  (Bernake has been saying this for years).

Excuse me?  Huh?  Ohhhhhh, what did he say?  He said that monetary policy is at a dead end in the US.   So that leaves fiscal policy.  And ya think Congress is going to actually do something about fiscal policy?  REALLY?  The Super Committee of 12 couldn't get it together.  How can a group of 435?   He also thinks Euroland is already in a recession (Duh) and that we could follow if something doesn't get done.  (What are the odds of that?)  He did note that the US Treasuries are the "the cleanest dirty shirts" out there.  In other words we're in debt up to our ears and our balance sheet ain't pretty...... but we still have the lowest risk in the world.

Ok, so the charts are below.  Note price, volume and the candlesticks.  The DIA looks a bit better as it closed over it's 50 SMA.  But the cards trump that as the SPY and the DIA are still lagging below the 50 SMA.  Add the incredibly crappy volume and you have a ride to the basement.  Caveat: Some stunning news like Europe has solved all it's problems changes everything.  LOL

No change in the trends.

CURRENT MARKET TRENDS
Long Term (Weekly Chart) – DOWN
Medium Term (3 day chart) – DOWN
Short Term (Daily Chart) – DOWN

A Kiss is Not a Kiss - Casablanca, circa 1942 - Humphrey Bogart, Ingrid Bergman

 Yes, a kiss is not a kiss.....

And Today, the DIA tried to start a leap to the bottom of the channel, where it would ...... "kiss the channel good bye" before tanking again.  But alas, it leap into action with terrific speed gapping up large and moving quickly to the 50 SMA, where it promptly stopped and turned tail.  Well, at least for the moment.  There's always tomorrow~

Volume is pathetic (see daily chart).  Yes, better then the anemic half day Friday after Thanksgiving, but none the less anemic even for a Monday.  Not the surging volume one looks for at the beginning od a solid move upwards.  A look at the 3 day chart gives a better perspective of the pending attempt to reach the bottom of the channel.

To this technician it seems more like a well fed bull who enjoyed the Thanksgiving feast, and having taken a nice rest was in the mood to get out of his chair and run a bit.  But only a bit.  At best a run to the bottom of the channel.  At worst, this turn at the daily 50 SMA is his best effort and the downside run begins again.

It the news again.  OMG~  A fiscal pact to sace the day!  OMG~  Yes!! Yes!!  Goodie, goodie!  Of course this is the 50th good rumor we have heard in the last few months.  Amazingly there are plenty of rubes in town to clap and smile about more BS.

No changes in the trends.  Below are the dialy and 3 day charts.


CURRENT MARKET TRENDS
Long Term (Weekly Chart) – DOWN
Medium Term (3 day chart) – DOWN
Short Term (Daily Chart) – DOWN

A Kiss is Not a Kiss - Casablanca, circa 1942 - Humphrey Bogart, Ingrid Bergman

 Yes, a kiss is not a kiss.....

And Today, the DIA tried to start a leap to the bottom of the channel, where it would ...... "kiss the channel good bye" before tanking again.  But alas, it leap into action with terrific speed gapping up large and moving quickly to the 50 SMA, where it promptly stopped and turned tail.  Well, at least for the moment.  There's always tomorrow~

Volume is pathetic (see daily chart).  Yes, better then the anemic half day Friday after Thanksgiving, but none the less anemic even for a Monday.  Not the surging volume one looks for at the beginning od a solid move upwards.  A look at the 3 day chart gives a better perspective of the pending attempt to reach the bottom of the channel.

To this technician it seems more like a well fed bull who enjoyed the Thanksgiving feast, and having taken a nice rest was in the mood to get out of his chair and run a bit.  But only a bit.  At best a run to the bottom of the channel.  At worst, this turn at the daily 50 SMA is his best effort and the downside run begins again.

It the news again.  OMG~  A fiscal pact to sace the day!  OMG~  Yes!! Yes!!  Goodie, goodie!  Of course this is the 50th good rumor we have heard in the last few months.  Amazingly there are plenty of rubes in town to clap and smile about more BS.

No changes in the trends.  Below are the dialy and 3 day charts.


CURRENT MARKET TRENDS
Long Term (Weekly Chart) – DOWN
Medium Term (3 day chart) – DOWN
Short Term (Daily Chart) – DOWN

"It's a Wonderful Life", Circa 1946

Posted from my iPhone.

Remember the movie with Jimmy Stewart and Lionel Barrymore? Lionel Barrymore playing Mr. Potter, the crafty old boy who owns the entire town. Keeping them under his thumb, charging outrageous rates for everything in sight. And Jimmy Stewart, the hero who ran a Savings and Loan, a credit union of sorts, to save the day?

Who will save the day in Europe?

It's loansharking at its best! A legal rip off of sorts. Price gouging that would be quickly curtailed by the authorities in other circumstances. Just like the spike in oil a few years ago, where traders played on the hysteria and drove prices through the roof, the same thing is happening in Europe. Although it is a bit different. When you're down and out and you can't get credit no one wants to loan you money. And people like "Mr. Potter" (AKA Lionel Barrymore) take advantage of that! As a result the bond yields are soaring in Europe, things are beginning to crack and if someone doesn't come and save the day, the effects will be worldwide.

I haven't looked at the charts in a few days. I've been out of town. But it seems fairly simple. The Dow is down big, and it looks like we could be headed for the $10,000 psychological level. I've talked before about the need to test this level again. Hold on your hats folks this is going to be a roller coaster ride

No changes in the trends, everything is DOWN. But somehow I think you knew that.

Enjoy the rest of your weekend.

All Hands on Deck~All Hands on Deck~

No time to write much or be witty today.  As suspected we are going down.  Have the American people yet realized that no politician in office gives a crap about them?  Have they realized that the politicians only care about themselves?  If a Super Committee of 12 cannot get anything done, how can we expect the entire Congress to agree on anything and get it done.

America, it's time for a clean sweep.  Anyone in office, and I mean anyone needs to be booted out.  PERIOD!

Everything is down in the trends.


CURRENT MARKET TRENDS
Long Term (Weekly Chart) – DOWN
Medium Term (3 day chart) – DOWN
Short Term (Daily Chart) – DOWN

ZZZ-Zzzz-ZZzzz-ZZZ-Zzzz-ZZzzz . .

6:24 PM

It's raining; it's pouring.
Today the market was snoring.
It bumped it's head on the back of the bed,
And it couldn't have been more boring~!

Remember that nursery rhyme?  Huh?  What?  Nooooooo.  Never!  Not me~  I wouldn't think of changing the words!!  No Way!!

It really was a boring day.  Nothing much moved.  Volume was weak, which in this case says, no one is willing to make a commitment over the weekend.  Be ye bull or bear, no one wanted to commit to a direction for Monday.  Just hold and wait.  And speaking of wait....... OMG~  Look at the charts!!!  Could it be?  Is it real?  Is it a reversal candlesick on the DIA?  The SPY?  Hot damn and full speed ahead!

Uh-oh.  Wait a minute.  Not so fast there buddy.  DANG!  Seems that candle is a weak candlestick and that doesn't quite fit the reversal standards.  Sheesh.  It's RED for goodness sakes.  That's a no-no.  And the QQQ's?  Damn!  Looks like grandma's undies hangin' on the drying line.  In a word........ kinda saggy.

The Bulls aren't completely dead........yet!  Ok, a few died on the QQQ's.  But we still have two outta three of the majors.  There are still a few cards left to be dealt.  Me?  I'm a holding my powder until I see the whites of thier eyes.  Monday should give us a signal, and tell us if we're gettin' somethin' nice for Christmas or just a lump of coal.   There was talk of something getting done this weekend on the Europe fiasco.  (Yea, shaw~!)  Hey, feels like we're in Vegas and it's crap shoot city.  And the odds stink in craps~

Two changes in the Trends.  SPY, DIA, QQQ, daily charts below.

CURRENT MARKET TRENDS
Long Term (Weekly Chart) – sideways
Medium Term (3 day chart) – Down
Short Term (Daily Chart) – Down

Watch Out She's Gonna Blow - BP Oil Spill, Deepwater Horizon Rig, circa 2010

8:54 PM
What a day~!  Over night yields crept up in Europe and the EOD (End of Day) selling from yesterday carried over to this morning despite some good news.  Yes, initial jobless claims were down to 388,000.  Housing Starts and Building permits were up.  But that damned Europe just won't play nice!!  Limey Bastards!!

Technical analysis is almost worthless in this environment, as the whispers, rumors and news events are keeping everyone swaying this way and that.  Nervousness pervades the market.  Looking at a chart of the VIX and it seems stuck over 30 for the last 4 months!  Yes, a reading over 30 indicates a lot of fear in the market and a lot of volatility.  For what it is worth things are not looking good technically.  I would not be surpeised to see more downside to this little run.

The Scoop:
Daily DIA is still in the channel by a thread.  It broke below the channel, turned on the 100 SMA and closed at the bottom of the channel.  A slim possibility remains that we are still in the uptrend here.  VERY SLIM!~   More than likely the weakness will take us down further, perhaps to the 50 SMA before we have a turn around.  3 day and weekly charts still looking ok, but the weakness is showing there too.Watch the news, watch the news, watch the news.  Oh, did I mention to watch the news?  Daily chart below.

Daily SPY has broken down, no if's..... and's ...... or but's.  The daily SPY broke thru the botom of the channel (see S1 on the chart) and is moving down.  It came close to the 50 SMA before reversing and closed right at secondary support, S2.  Next stop the 50 SMA.  After that?  After that is down by 2's.  120, 118, 116, 114.  Daily chart below.

The QQQ's are in the same shape as the SPY.  So it's 2 out of 3 predicting a lower drop and more downside before things change.  I suspect the DIA will now follow suit.  Changes in the Trends noted below.

CURRENT MARKET TRENDS
Long Term (Weekly Chart) – Up
Medium Term (3 day chart) –  Sideways
Short Term (Daily Chart) – Down

Snikes! "The Kansas city Shuffle!" - Lucky Number Slevin - Bruce Willis, circa 2006

7:59 PM

What's the Kansas City Shuffle?  Really?  REALLY?  Ok, ok, guess you missed one of my favorite movies, Lucky Number Slevin.   According to Bruce Willis, the Kansas City Shuffle is when everybody looks right and you go left.  Simple huh?  But what a great diversion!  And that seems to be what the market is doing this week.  The Kansa City Shuffle~!  We're looking up and the market goes........ ker-plunk.  Now go rent the movie.  You'll love it.  Bruce Willis, Lucy Lu, Ben Kingsley, Morgan Freeman and Josh Harnett.  What's not to like?

Seems we just can't get a break here.  We needed a close above the minor resistance of DIA 122.00  Instead, we get the Kansas City Shuffle and BAM!  The market takes a wrong turn.  But no worries.  We're still in the channel.  And we need to stay in the channel.  Also it would be nice if the 3 day and the weekly chart managed to stay above the 50 SMA. Breaking below that gives a negative connotation to the current uptrend.

On the daily chart we are now below the 200 SMA and we did a slight turn around on the 20 SMA today.  Can you see that on the chart?  I doubt that support will hold, but again it all depends on the news!  It's really amazing.  Buffet has been on a buying spree this year, spending some 24 BILLION on stocks like IBM, BAC, WFC, V, DTV, DG, MTB, INTC, CVS!  You'd think that alone would lend confidence to the market.  <sigh>  

No changes in the trends.  Below are the daily, 3 day and weekly DIA charts.  Look at them, read them, learn to fish.  


CURRENT MARKET TRENDS
Long Term (Weekly Chart) – Up
Medium Term (3 day chart) – Up
Short Term (Daily Chart) – Up

High Ho, High Ho, Where will the Market go? ~ The Seven Dwarfs, circa 1937

8:52 PM

High Ho, High Ho, Where will the Market go?
Will it go up high,
Will it go down low,
High Ho,
High Ho, High Ho, High Ho~

Ahh, if only it was all as wonderful as Snow White and the Seven Dwarfs.  <Sigh>  Instead we have a week marked by poor volume and little movement.  Of course this compares with the willy nilly, wild moves of late.  So it's a nice diversion.  Europe is still there but it seems the market is getting used to the idea that Europe is a mess and will be so for a while.  Hence, instead of crazy big moves we just sit and waggle.

In the meantime, we can sit back and watch as the few and powerful try to squeeze Occupy Wall Street into submission.  Seems suddenly someone is a bit worried it might be the beginning of the peasants actually starting a revolution!  OMG~  So pressure has been brought to bear, a few phone calls to the right places and suddenly the police are trying to break up the party.  Of course they forget that the best way to actually incite the revolt is to try to stop the party.  <Sigh>  Pity the poor powerful fools.  Perhaps they should just say, "Let them eat cake"~  Hey, it worked for Marie Antoinette!  Didn't it?  Well, at least up until the part where they used that guillotine thingy and beheaded her!  NICE~!

The Charts
Not much to report on here.  But an interesting note, the DIA and the Q's are above the 200 SMA.  The SPY has not recovered and is stuck beneath the 200 SMA.  A divergence that lends to an air of uncertainty.  It would be nice if all three indices where above their respective 200 SMA.  That would give a stronger indication of an upside resolution to the week/month.  No changes in the trends.  Below are the daily charts of the SPY and the DIA.

CURRENT MARKET TRENDS
Long Term (Weekly Chart) – Up
Medium Term (3 day chart) – Up
Short Term (Daily Chart) – Up

Extra, Extra, Read All About It~!

BLOGGER SCREWS THE POOCH!!!

Yes, it's true and it has been verified by a reliable source.  The blooger in question..... (ME!) ...did not update his SPY chart before posting it here in last night's 8:46 PM post.  He will receive 50 lashes with a large wet noodle.  Below is the corrected SPY Daily Chart.  Note the decline in volume previously mentioned last night at 8:46 PM

OK, here's the CORRECT SPY chart for Monday 11-14-11

"Monday, Monday" - The Mamas and the Papas, circa 1966

8:46 PM


Yes, it was a Monday all right.  Google the lyrics and see if things don't make more sense.  And looking at the volume one wonders if everyone stayed home to make it a four day weekend!  We are chopping around, gapping up-down here and there, the likes of which I have never seen and with such persistency.  It's all about the news, the jitters, a nervous market and......wait for it..........yes........EUROPE~!

Today was a bit of a down day.  But no damage done to the technical picture.  We are still "Up, Up and Away" (The Fifth Dimension, circa 19676)

No changes in the trends.  Daily SPY chart below.  I showing the SPY to illustrate the decline in volume which does not really show in the DIA but does show on the SPY, the QQQ, and the actual DJ-30.  Of particular note is the fact that Monday's volume was more anemic than last Fridays.  And last Friday was Veterans Day!

CURRENT MARKET TRENDS
Long Term (Weekly Chart) – Up
Medium Term (3 day chart) – Up
Short Term (Daily Chart) – Up

"We're Moving on Up" – George Jefferson, 1975

8:35 PM

Yes we're moving on up. We had a great day Friday with a nice bullish candle and we are on our way to the top of the channel.  Of course that's assuming that Europe gets its act together.  They are still in a very precarious position, and the politicians are still jostling for power, rather than taking care of the problems. They have learned their lessons well at the U.S. Congressional School of Idiocy.  What?  Of course they are all graduates of that fine institution!!

But heck, let's focus on the charts. We now have a nice candle after bouncing off the 20 EMA and we're moving again towards the top of the channel.  Volume was a bit anemic, but we expected that with the holiday and all.  DIA Target 124.50.

The amazing thing is that in spite of the problems overseas, the stock market continues to trudge and make its difficult journey upward as it climbs the wall of worry.  It doggedly refuses to be trounced, and despite the news continues to fight it's way upward little by little. If Europe would only get out of the way, the stock market would take off.  That much is obvious.  Of course Europe's problems are not going to be solved quickly. <Sigh>  But the sooner they are solved, or the sooner we get used to hearing about it, the sooner the bulls will come out to play.......in force.  Perhaps Santa will give everyone a nice present this year.  And we can all get our kids the "G.I. Joe with the Kung Fu Grip." (Eddie Murphy, Trading Places, 1983)

No changes in the trend table.  Daily, 3 Day and Weekly Charts of the DIA below.


CURRENT MARKET TRENDS
Long Term (Weekly Chart) – Up
Medium Term (3 day chart) – Up
Short Term (Daily Chart) – Up

Do You Dress on the Right or the Left?

5:18 PM

Just a few minutes ago a friend of mine asked me if I thought the market was going to go up or down tomorrow.  He has a habit of asking others to make his decisions for him.  I simply said to him what a man with two penises says to his tailor when asked if he dresses on the right or the left..........."Yes"~

Let's face it folks, if I had the ability to forecast the market in advance I would be on a boat headed for the Tahitian Islands, never to return.

But I digress.  After hearing the news this morning about better claims numbers and the easing of Italy's bond yields, I was hoping for a turnaround candle on the chart.  Instead, price was turned back to the downside at the 200 SMA, not a bullish sign.   We are left with a neutral candle that leaves us hanging again, wondering what tomorrow will bring.  As usual for the last few months, it's all about the news!  We are still in the channel, although only by the skin of our teeth.    I'm hoping for an up day tomorrow, lest we break below the bottom of the channel.  That would not be a good thing and could take us on a downward run.   A close tomorrow above today's high would signal another run at the top of the channel.  

Keep in mind that tomorrow is Veteran's Day, and while the market is open, it is likely to be slower than a usual Friday.  Everyone will be taking off early for a three day weekend.

CURRENT MARKET TRENDS
Long Term (Weekly Chart) – Up
Medium Term (3 day chart) – Up
Short Term (Daily Chart) – Up (with just a wee bit of concern)

"Whoopsie Daisy~!" -Bill "the Butcher" Cutting, Gangs of New York, 2002

6:22 PM

Damn~!  Greece makes nice-nice and everyone gets spooked by Italy.  Go figger!  I just want to know what made 7% the "magic" number?  (For those not in the know that's the number Italy must now pay to borrow money)  Spooky!

Hey, remember that song?  By the Zombies?  It really does apply to the market these days.

You always keep me guessing and I never seem to know what you are thinking;
And if a fellow looks at you it's sure your little eye will be a winkin,
You pull me in thinkin' that you're going up,
and then you turn, and tank, and break my butt.

Love is kinda crazy with a spooky little girl like you.

OK, ok, so I changed a few of the words in the last two lines.  So sue me~  The market nose dived today.  There is no other way to say it.  And I feel compelled to say that the market always drops faster than it moves up.  And it drops with more volume than when it moves up.  Ever since the uptick rule was cast away by the all knowing SEC, precipitous drops on increased volume seem to be the norm.  What's the "uptick" rule??  This was a regulation that went into effect in 1938.  Like the Glass-Steagall Act was enacted to protect the markets, this was designed to stop the market from tanking rapidly.  Remember, after that initial "crash" that marked the beginning of the depression, the market continued to fall for some 10 days.  The uptick rule simply stated that the price of a stock must have an "uptick" (an increase in price) before you could sell short.  So falling stocks were somewhat protected, in that everyone could not simply "pile on".  It was cast away in 2007.  You see folks, FEAR is a much greater force than JOY.  Think about it and you'll surely agree.  So when a stock tanks, everyone runs for the exit.  Hence volume goes up and the price drops precipitously.  Yes, I do think that rule should be placed back into action.  Look at any chart and you can easily see that since 2007 down volume always seems to outpace up volume.

Like everyone else I think there is plenty to worry about.  Iran and the atomic bomb, Greece, Italy, Europe in general, and of course the US Economy.  Climbing this wall of worry will take a lot from the market.  And while corporate earnings are decent this quarter the future is tenuous at best.  Europe's problems will affect us in a bigger way than most people realize.  And yet today could turn out to be like many days in the past few months.  Just a fear raising it's ugly head only to be negated when logical rationale appears in a day or two.  Yet I feel there is a good possibility that we are headed lower (my lack of rationale?)

We are still in the channel and still wiggling our way upward.  Supports are listed in the chart below.  No changes in the trend table.  Yet wait for the turn around at support before adding to or initiating new positions.


CURRENT MARKET TRENDS
Long Term (Weekly Chart) – Up
Medium Term (3 day chart) – Up
Short Term (Daily Chart) – Up

Charlie Chaplin........

entered a Charlie Chaplin look-alike contest in Monte Carlo and came in third.  Now, that's a story!!  What does that have to do with today's commentary?  Nothing.  I just wanted to start this commentary with something other than self absorbed politicians or the latest rumor in Europe.  As I said again yesterday, Europe trumps everything these days.  A whisper, a rumor, a well placed word and the market jumps.  So while we look at the charts and the technical's, remember this is a news driven market, the likes of which I have not seen before.

We are still in the channel and based on the chart I would expect the price to continue to rise to the top of the channel on this run up.  Target DIA 125 or Dow 12,500.  Once that level is reached I'll be looking for a down move to the bottom of the channel.  Like those shampoo directions.....wash, rinse, repeat.  Alternatively reaching the top of the channel and getting some good European news (or some other hot news catalyst) could take price up thru the top of the channel to a new place in the sky.  If you didn't go long after the reversal at the bottom of the channel last week, you should have gone long on the mini-breakout today.  Again, look for blue skies above until we hit the top of the channel.  No change in the trend channel~

CURRENT MARKET TRENDS
Long Term (Weekly Chart) – Up
Medium Term (3 day chart) – Up
Short Term (Daily Chart) – Up

Chop Chop~

9:41 PM


Today I think I'll skip the editorial  comments........ you know, like mentioned the resignation of Greece's PM, or the issues at hand in Italy, or.....what?  Ok, Ok, Ok!

Right to the charts.  It was an up day after a lot of chop.  That is if you call intra-day swings of over 200 points chop.  None the less it was an up day .  And the DIA closed slightly higher than last Thursday.  We are solidly in the old channel and chopping our way to the upside.  Volume was pitiful today and last Friday, but hey.....come on.......it was a Friday and a Monday!  So regardless, price keeps ending on the upside even as the Bears keep trying to pull things down.

Fly's in the buttermilk what'll I do?
Market in the chop chop shoo fly shoo,
Rumors 'bout Greece and Italy too,
Chop to the Europe bail out.

Chop Chop Chop to the bail out,
Chop Chop Chop to the bail out,
Chop Chop Chop to the bail out,
Chop to the Europe bail out.

What's all that mean?  Simply put it means that even with Santa on his way, Europe trumps everything at the moment.  So wile the charts are solidly in the upside channel, and moving on to a Christmas Rally, one whisper from Europe can change everything in a New York second.  So stay on your toes boys and gurls.  Below are the DAily and the Weekly Charts of the DIA~  No change in the trend table.

CURRENT MARKET TRENDS
Long Term (Weekly Chart) – Up
Medium Term (3 day chart) – Up
Short Term (Daily Chart) – Up

Market Volatility - A Reader's Request

Jumpin' Jehosephat......What's a fellow to do?  A subscriber here known as Sir Synchronization recently asked in so many words......How can I trade in this volatile market without getting clobbered?

I'm not sure I have an answer to that question.  I certainly do NOT have a trading tip that is the Holy Grail.  So here are some things I think are important in trading the market anytime, then we'll address the current market and my thoughts about the volatility.

1. THIS IS BUSINESS!  Too many people think playing the market is a game.  Or it's easy.  Or it does not require any time.  NOPE on all counts.  Like any other money making endeavor trading-investing takes time.  DUH!  If you think it's easy....... plan on losing your arse.  Let's flash back to the internet bubble, January 3, 2000 ....

Goofy: "Uh-huh, uh-huh, hey, uh, the market is on fire & Yahoo is a buy at $477/share.  Let's get some before it goes to $1,000".  
Logical Larry: "Ummmm, but they aren't making any money Goofy."      
Goofy: "Uh yea, but uh-huh, uh-huh...I heard someone at Goldman said they were a buy."

Yahoo's all time high was $500.12 per share on January 4, 2000.  One year later Yahoo was trading at less than $30 a share.  Since then Yahoo has not broken $59.00 a share and currently trades in the $15 area.  

Later in 2001........
Goofy : "Uh-huh, uh-huh, hey Larry, I got a winner this time.  Let's buy some Enron.  They are on fire!"
Logical Larry:  "I dunno Goofy, I did a lot of research and it looks like they might be cooking the books."


Do your homework!!  Think for yourself (more on that one later).  Even a Warren Buffet "buy and hold forever" strategy takes a lot of time.  The less time you are willing to devote, the more you should consider using a professional to assist in your investment decisions.  Nothing personal, but THIS IS BUSINESS folks.

2. Have a BUSINESS PLAN and follow it.  Every business needs a plan.  Those that do not have a plan rarely succeed.  Can you imagine opening a new car dealership or a dental office without a business plan?  NOPE!  Can you imagine the look on your banker's face when he asks to see your business plan and you look at him with a straight face and say "Huh?  Oh, I don't have one.  I'm just going to wing it".  There goes your business loan in torrents of laughter!!  Nothing personal, but ...........THIS IS BUSINESS folks.

3. A business plan requires a trading plan.  DUH!  Make one.  Follow it.  Follow it even when your emotions tell you otherwise.  Keep your emotions out of the equation.  Know your entry price.  Know your exit price.  Know your maximum allowable loss.  Limit your losses and accept them as any other company does, knowing that losses are just the cost of doing business.  I look at losses as one of the costs of trading.  I have no problem executing a trade and taking a PLANNED loss.  And I have no problem executing a trade and taking your money!!!  Nothing personal, but......... THIS IS BUSINESS folks.

4. Money Management - This is the most important aspect of trading.  No if's, and's, or but's.   There is no Holy Grail.  You will have losses.  Losses are a part of any business.  Plan on them.  Manage them.  Keep your losses low and let your profits run.  Personally I believe that if I am only right half the time, but manage my losses, I make a nice profit.  You heard right.  I only need to be right 50% of the time.  The trick is being willing to take a reasonable loss without letting your emotions get in the way.  Losses are a part of doing business, a part of trading.   Nothing personal, but .............. THIS IS BUSINESS folks.

5. Check your emotions at the door!!!  No one likes to lose money.  So often people let emotions rule their decisions and they lose their arse!

"Oh, no, I have a loss!  Oh darn!!  I can't sell now.  I can't be wrong.  It's gotta come back.  I'll ignore my plan and keep this baby.  Oh, wait I don't even have a plan!"

Then the loss gets bigger and bigger until they cannot stand the pain anymore.  Then they sell and wonder what happened.  A trading plan and money management helps keep emotions in check.  Nothing personal, but........................................ THIS IS BUSINESS folks.

6.. Trading, Investing, or some combination?  Berkshire Hathaway style, Hedge Fund style, Swing Trader, Position Trader, Day Trader?  This is part of your business plan and your trading plan.  Know your style.  Know the plan.  Nothing personal, but.................... THIS IS BUSINESS folks.

CURRENT VOLATILITY - Not for the Faint-Hearted

I think to play the market now requires some big adjustments.  At least until Europe gets their act together.  Those adjustments depend on your trading-investing style.  But here are some things I have considered and/or enacted.  Take what you like and leave the rest.

**Reduce exposure.  Trade smaller lots.  That's right, reducing your exposure helps to reduce risk and reduce losses.

** Widen the stops, especially on winners.   I tend to use trailing stops and have made them much wider.  The trailing stop does not advertise your position to everyone.  This is an especially good way to play positions with a really nice profit.  With those stocks I'm willing to change my trailing stop to as much as 40% of current profits.  That keeps a reasonable amount of my profit and hopefully dies not close out my position on this insane volatility.

**  Reduce your required profit goal.  Taking 5% NOW is less risky than holding for a longer time frame in hope of getting 20% later.

**Let a swing trade become a day trade.  Often, if I have hit my profit goal the same day I enter a position I get out the same day.  This eliminates the overnight news risk.  Can you say Greece and Prime Minister?  Besides, I hit my profit goal.  So there is no need to keep this position.  Don't be greedy.  Greed is a dangerous emotion.  Remember: Pigs get fat, Hogs get slaughtered.

**Keep more or all your money in cash.  You've heard me use the phrase many times "Keep your powder dry".  Sometimes it's better to wait out the storm, letting cash accumulate so you are ready to strike when the time is right.  Remember that the great Will Rogers used to say......."I'm more concerned about the return of my money rather then the return on my money".

**Buy quality companies that have a high degree of survive-ability during this volatile time.  In better times I used this only for long term trades.  But in today's world, if you ain't a quality company, and if you ain't makin' a net profit, I don't want you!  Way too risky for this boy.

**Buy and Hold - Buffet Style.  Nuff said!

**Buy quality stocks that pay a dividend.  And a lot of great companies are selling at discounted prices and paying a nice dividend.  They have less wiggle in price and will never be a 10 bagger.  But their price stability and nice dividend puts your money to work with low risk.

Finally I am reminded of two great quotes.  The first is a Chinese proverb that is credited to Lao Tzu the founder of Taoism.  It reads:

"Give a man a fish and you feed him for a day. Teach a man to fish and you feed him for a lifetime."

The second is by Don Worden.  He gave me the most important words I have ever heard.  It is simply:

"Think for yourself" 

Both of these apply to trading and investing.  Those who listened to a certain high powered analyst in 2000/2001 lost a ton of money in the Internet Bubble.  Think for yourself!  Even if a supposed  professional is assisting you with your trading-investing.........think for yourself.  Make your own decisions and learn to fish for yourself.  Do not blindly follow anyone.  Have a Business plan, a Trading-Investing Plan, a Money Management Plan and stick to them.  Think for yourself!  Remember that losses are a part of doing business and to leave your emotions at the door.  For every winner there is a loser.  And I will happily take your money on the next trade.

Because ................................

as we all know.......................

yes...say it with me.................

Nothing personal, but .............

THIS IS BUSINESS folks!!!!!!

Wax on, Wax Off (Karate Kid, 1984)

10:48 PM

Yes, you heard it right.  Wax on, Wax off.  Market up, Market Down.  It's simply a case of insanity.  Today it seems the referendum in Greece is "off".  Seems they might have realized the stupidity of that idea and are now back-pedaling as only politicians can do.  And here I thought our politicians were self serving idiots.  At least they stick to their self serving idiocy to the bitter end.  Then again perhaps Greece is a good example of how the rest of the world views our political games over the last months and years.  Food for thought!

So it's back to rumors and innuendo to run the market.  Screw fundamentals.  Forget the company's business plan.  Never mind that they are doing well and making a fortune.  No, let's just do the herky jerky based on the insanity of the Grecian politicians.

But I digress, two days ago Greece's Prime Minister spoke and the market tanked.  Today he spoke again and the market is up.  What will he say tomorrow?

In addition the ECB (European Central Bank) cut interest rates by 25 basis points.  Now the rate is 1.25%  The market liked that also.  So the Dow was up just over 200 points today.

The Charts

Will we go up again tomorrow?  Will everyone dump their holdings at the end of the session to avoid holding over the weekend?  Will the politicians say something "good" stupid or "bad" stupid?  Dunno!!

But I did notice that I drew a channel at the becinning of all this insanity (See September 15th).  And for some reason I extended the lines.  And low and behold we seems to be bouncing again in those parameters!  Is this the "new" channel?  Hard to tell just yet, but at least it's an uptrending channel!  Check the trends.  (In one of my upcoming reports I'll discuss my reasoning behind the trend table).  Below are three charts.  The daily, the three day and the weekly.


CURRENT MARKET TRENDS
Long Term (Weekly Chart) – Up
Medium Term (3 day chart) – Up
Short Term (Daily Chart) – Up (Depending on the Political Insanity of the Day!)

Slipping on the Greece~!

10:04 PM

What a day!!  Seems there was something on the market floor that caused a rather big slip.  A REALLY BIG SLIP.  Yes, it was a big spot of GREECE!

Things in Europe are just dysfunctional~  Like a large family, where everyone seems to have their own agenda.  There's the passive-aggressive one, the manipulative one, the bully, the liar, the whiner, the ADHD one, etc. etc.

Today, the passive aggressive member of the family (Greece), after begging and crying for a few billion sheckles and getting their way said.......well, maybe we don't want your money after all!  Nanny nanny boo boo.  Really?  REALLY!  Yes, it seems the Prime Minister of Greece is taking a page from the Congressional School for Aspiring Self Serving Politicians.  Yup.  Right out of the first course, "Taking Care of Yourself 101".  Believe it or not, the Prime Minister of Greece decided it was better not to do his job and what was best for the country.  No, no, better to do what is best for the Prime Minister!  Yea, that's the ticket.  Yes, we'll let the people decide!  What a good idea!  That way no one can blame the Prime Minister and he'll be popular.  And being popular means staying in power.  He just forgot that being the Prime Minister of a bankrupt nation is nada, zilch, zero, phfffffft on the power scale.  Prime Minister, have you been getting into the family hooch again?  We told you that still in the back yard was strictly "off limits"!

Then there's Italy stirring up things a little as they just aren't getting enough attention.  Boo hoo.  Add it all together and you can hear the elevator operator asking "Going Down?"  As if there was any choice.  Remember that thing we've talked about before.  You know, uncertainty.  We thought there was some certainty that Europe would actually do something about the financial crisis there.  And then Greece threw a curve ball.  Now we have uncertainty galore.  The market HATES uncertainty.  And where there is uncertainty there is crazy volatility.  Hence the VIX is now back in the stratosphere, and who knows which way things will go tomorrow.  Seems there is a hint of panic in the air boys.

The Charts - DIA and SPY
We had hoped the our first line of support for the DIA would hold.  But seems the pace and size of the drop Monday was just too great and the support seemed to just disappear.  Worse, we opened BELOW the first line of support!!  The DIA held the second line of support.  But given the increasing volume for Monday and Tuesday I'm not holding out much hope for that support to hold.

Making matters worse is the daily chart of the SPY.  It broke the first AND second lines of support and on big volume.  It is sitting below the 20 EMA. and looking weak, as if to say 50 SMA here we come.

The direction of the market seems to move on a whisper of wind these days.  And these charts are looking weak.  I see a good possibility of re-testing the bottom of the original channel that we were stuck in for two months........ DOW 10,600.

Bulls cross your fingers AND toes.  Bears, have another beer and cheer.  Below are the daily charts for the DIA and the SPY.

CURRENT MARKET TRENDS
Long Term (Weekly Chart) – Sideways with a down bias
Medium Term (3 day chart) – Down
Short Term (Daily Chart) – DOWN