Seat Backs and Tray Tables

Inside an airplane“Place your seat backs and tray tables in their original upright position”.  Anyone who’s flown knows that phrase implies we should anticipate a slightly bumpier ride, whether its due to turbulence or a decent for a landing.  Either way, a shift in direction.

Pundits have been preaching that the market’s extended/overbought and that equities overvalued; at levels unjustified based on current economic conditions.  They may be true but *that* comment doesn’t make me want to exit my longs and get short.  Not yet. 

USD Index 9.30.09End of quarter window dressing is now over.  The market has been slowing drifting.  Even the US Dollar Index [right] is at an important inflection point vs. its October ’08 low.

The longer term charts, both weekly and monthly indicate we are remain in an up trend so but based on the huge run we’ve seen siES 9.30.09nce the March lows and all the foreboding from the pundits, I now turn into the shorter timeframes [Daily and hourly] for signs of a shift in near term direction.  Over the last week the market sold off somewhat and has formed a triangle with other indicators such as CCI indicating an apex or shift in direction is near. 

I believe this is leading up to tomorrows economic releases AND treasury auction announcements as a guide or confirmation if the economy truly is improving [or not] and the level of debt quantitative easing to expect in the near term.  Not all triangles break in the direction of the previous trend.  Bad news tomorrow and an obvious lessening of QE could take us down – and quick.  I continue to hold my longs with a ES_F short and long in DRV.  Make certain your seatbelt is fastened; it’s going to be a bumpy ride. 

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