Market view

Back from holiday and back to the markets. Been short over last week on vacation, no worries looking at the markets at all. I see we have slowly moved up a little bit more, but as you see today, we lost all these gains over last week. And IMO this is just beginning, we cant keep going up like this, it will end up BADLY and like a crash type.

We made a very bearish candle on the daily chart and we BROKE the uptrend line which is the 1st signal to get short ( or the trend changes ) this happended for the first time 19th October. China raised the rates and still problems with the banks. Indexes very near getting the bearish MACD crossover where the selling pressure SHOULD accelerate. The dollar as I am bullish on rallied yesterday and broke the downtrend line, I think the dollar is ready here for a massive rally and shorts going to cover.

Earnings have peaked.....now comes the quarter where they go down and the market will go down first.

Companies are beating the numbers because they have cut expenses to the bone (and have had estimates lowered).....but the bottom line, revenues, have sucked.....and have been burried in the print, if mentioned at all.

Now all these people out of work, people they layed off, are starting to hurt their numbers.

Look at AA.....barely met drastically lowered numbers.

GE missed.

AAPLE blew away the fake estimates (only met the whisper) and basically guided lower.....and Ipad sales were lower than expected.

IBM......you will have to look hard, but guesse what, revenues were up a whole 3% overall.....not too great for a company at multi year highs.

GS- Wow, revenues down 27%.


Where's the big earnings rally?

Hang in there bears, they've kept the market propped up on low volume momentum......wont be able to do it with high volume conviction.....

An unbelievable number of issues will fuel the sell-off.

Well not much more to say , still 100% short markets and long the dollar. I think this is the beginning for a VERY ugly week as we broke the uptrend and dollar broke downtrend.

Well we have POMO days today and Friday , lets see if they can hold and pump markets up to green today like they have last 1.5 months, but I think overall they cant keep hold us up, and we will tank hard.

Commercial Hedges are far too net short the NASDAQ-100. Whenever commercial traders get this short the NDX, there is a very high likelihood for a correction. And seeing as how the NASDAQ led this move higher; as goes the NASDAQ-100, so goes the market. Commercial hedgers took record short positions in October. More than double what we saw ahead of the 2008 top.

The AAII Bull Ratio (4-week average) is way too high. There's a very strong correlation between market tops and bullish sentiment getting over-extended.

Institutional selling divergence from the market getting high. Though the market continued to rise through October, institutional selling starting to pick up. This also has a high correlation to tops in the market.

VIX at 1-Month Low in October. Here's a table outlining the S&P 500's performance in the 2-3 weeks after the VIX hits a one-month low in the month of October. The odds highly favor the bears under these circumstances.

Up Big on Off-Season. Whenever the S&P 500 is up in the off-earnings season, the tendency has been to sell the market during earnings season. The last three times the S&P 500 has been up 5% or more in the off-season, the average sell-off during earnings season has been about 5%

SEE Index & ETF Only hitting too many extremes. There's also a very high correlation to tops in the market whenever, on multiple days, we see a reading of over 100 on the call-put ratio on the indices (Index & ETF Only ISEE). Whenever we start to see a lot of hedging or outright shorting near the end of a big rally like we've had, its been a pretty big sign that we're headed lower.

Broken Rising Wedge. We have a confirmed broken rising wedge. That is pretty bearish. Rising wedges are by their nature bearish formations to begin with as nearly 70% of the cases will usually end with a breakout to the downside.



The conclusion here is to STAY 100% short and long dollar, yes.. you need a bit patience, but this slowly creeping up move in markets will give away in a few days....... so no reason to take the risk and go long here IMO. But well, everyone says we go up no matter what. FED is behind and only way is UP ........ well lets see , this is starting to get interesting. I think the move down yesterday was just a "little" move for what we are going to see down soon. The Mclean summation index VERY good indicator for up moves and down moves in markets, and its about to roll over and gave a sell signal , so thats a VERY clear and good signal that markets will trend down now. It has been bullish since late August....time will tell if this is right again again, excellent indicator.