Long DRV/FAZ/SDS

Closed all of my earlier positions (SPY/FAS/DRN) yesterday before the close for a huge profit and went long with the shorties.

Looking good already.

Captain has turned on the seatbelt sign as lot of turbulence is expected in the next 2 weeks. Hold on tight. :-)

GLTA

Commercial Hedgers expecting Market Crash?

OK, the title may be upsetting. But is it even remotely true?

If you look at the above chart. Commercial Hedgers are the players who invest big chunks of money into the market. Since early 2007 until late 2008, these players were quietly hedging against BIG drop. S&P dropped over 50% after that.

Late 2008/early 2009, these same players were un-hedging and their hedges were at the lowest level seen in a while. And what you saw was massive rally of nearly 80%+.

Since early 2010 you see that these same players are Hedging BIG time again. In fact we are very close to the same levels last seen just before the crash of 2008.

Does this indicate, we are about to fall off the cliff? Time will tell.

GLTA

Current Scenario - Still short since ES 1070.5

Nothing really changed as you can see from the chart above, even with today's rally attempt. We in fact have even more confirmation on the next move down. A clear negative divergence. Also, if you see, spx is just trying to test the broken TL on the sub-chart above.
We either go down today or at most start the down cycle tomorrow.

GLTA

SHORT ES 1070.5

Short /ES @ 1070.5 around 1055AM EST, 12th July 10.

How is our Indicator doing? - II

So there. I have been calling for a bottom since last week and eventually we see the RALLY today. Is this it? Hell No. We will definitely be down tomorrow after these overbought conditions. How much and for how long will depend on the moves tomorrow.

Does this mean, we are NOW in an uptrend.
Yes. For now, the uptrend has resumed. The above indicator will be updated with the latest. Be wary of the fact that this indicator has already gone into oversold zone and there is a potential that it reverses tomorrow and in the subsequent days.

For now, LONG is the right trade.

PS: There is a chance that we develop a solid positive divergence on the above chart and which means the market will tank even harder than it went up. However, there is NO such evidence right now though.

How is our Indicator doing?

Let us check this intraday, around 2PM EST. This is how it looks.





Need i say more? We are pretty close to either rallying from here today or will do early next week.

Will keep you guys posted with the latest.

PS: The above chart is an inverse chart, hence go long the market if it goes down and vice-versa.

GLTA
Happy 4th.

LONG - SPY/FAS/DRN

Hello All,

I have been extremely busy lately. However, i will try and do a catch-up game now.

This week has been brutal and there is one more day to go. Tomorrow is a big day with Payroll data coming in. However, current setup clearly shows which way market is going to go. Market has bottomed today with a LONG hammer.

Few reasons market will go up from here.

1. Long hammer.
2. Positive divergence on NYMO, NAMO and host of breadth indicators. If we go up tomorrow, they will all be confirmed.
3. High yield bonds have barely budged and are actually starting to go up now.
   
4. Though SPX made a lower low from Feb, certain sectors did NOT even come close. Take RE for example.
5. Market is extremely oversold.
6. TNX is already showing positive divergence. TLT is extremely overbought right now.
7. Gold to spx ratio is at weekly extremes. So, either GLD drops dead or SPX rallies. It is possible that both happens. But it is highly likely that SPX rallies harder than GLD dropping. GLD started dropping already a copule days back.
8. Some of the international indices, namely India is still hovering near 52 week highs. If US goes down, everything will go down. This shows divergence and a much more bullish case than anything else.
9. NYSI weekly is still heading up as you can see from stochastics.
10. Less than 5% stocks are above 50DMA. That tells we will see rally of historic proportions as equity market is all about buy and sell. If the balance is lost, then there is NO market. :-)
    

I could actually go on. But will rest here.

Looking for either a) A whole summer rally b) At least a retest of 1100-1150 area in the next 1-2 months.

GLTA
Jason

PS:


The above chart was created and posted yesterday. I asked a question, if you'd go long or short this chart. If your answer is Short, then you are right as you would have gone long today when market tanked. The above is a complicated inverse ratio chart. Today it reversed hard and confirmed the theory of why one should go long here.