Healthcare - Pass or Fail = Sell

Obama is a disaster in my opinion. The health care bill is a disaster but at least I can be glad that some of Obama's buddies will "...save 3,000%" as he says. The reality is that the bill serves special interests. If it passes those interests will be happy but the economy and Americans will be adversely effected. If it does not pass, Obama's special interests will not be happy and the disappointment and perception of impotence of the government will lay bare for all to see.

In either case, my perception is Obama's/Pelosi's prime time moment = SELL. If the few remaining shorts out there can't deal with it and get taken out on some sort of squeeze - I think that will be a selling opportunity.

What a mess.

Bernake does not get it...thank god Ron Paul does

UWM Relative Value System Update

UWM System sold at the close today...market cycle triggered sell. This is not a profit target sell...

Here is a link with an overview of system performances for the last few years:  click here . Also note that this is a simple report based on capital required to trade - it does not reflect a proper allocation. Also, keep in mind that the model is using the same settings for all the securities in this spreadsheet, with the exception of trade frequency - which is a highly unusual capability and also indicates that entries that these results are not curve fit.

Analytics Examples for the EURO

The example below shows some of my recent work applied to EURO futures. Definately worth a look and Tommy did an excellent job with the trading overview and tutorial.

http://www.screencast.com/t/OTA4MWIwZmYt
http://www.screencast.com/t/MDk5NDAxMjM

Systems

This video shows some of the recent innovations by M3 for creating fully automated trade analytics. The video below may not display properly for you in the content frame...if it is cropped please use the following link.

http://www.screencast.com/t/MWIwMjVlZ

Direction of 50 day moving average on the SP500

This rebound has certainly been stronger than I expected. The extreme oversold conditions have now turned into extreme bought conditions and have been that way for a number of days. With that said, trying to short this advance has been suicide for many. One thing to note is that since the entire advance since March 2008 the 20 day moving average only crossed below the 50 day moving average one time and that was in July when we had the false head and shoulder pattern completing. When the cross happened the 50 day moving was still pointing up signaling that the cross would be a false. Now in early February and only the second time since March 2008 the 20 day moving average has crossed below the 50 day moving average although this time the 50 day is clearly moving south, in fact it started turning down 2 weeks prior to the cross. This cross certainly holds more weight than the cross back in July.

SP500 about to confirm a trend mode move down

SPX has broken cycle support and will trigger a trend mode move if it fails to rally over that support move. This is a VERY important development as a trend move from these levels could look like the similar trigger shown in September 2008 on this chart if it were to occur.

Russell 60 Minute Chart

After an impulsive 5 wave move down from the January highs, the Russell has experienced a strong oversold bounce. I see two possibilities unfolding here. The first case is we have an ABC move up, labelled in red, which was completed on Friday where we should see the start of a major 5 wave move down on Tuesday. The rising wedge pattern supports this view. The second case, which is not by any means strict EW analysis, is we are in some sort of double ABC wave move up which basically has the same outcome as a 5 wave move up which is what I labelled in purple, with a very strong wave 3 completing on Friday. Wave 4 would logically bring us back down to the bottom of the channel which coincides nicely with the yellow support line that marks a previous low back on December 17th and January 29th. Wave 5 up target is at the top of the channel also coinciding with the 50% Fib at about 615. We might see it run a few points higher just to squeeze and frustrate the shorts as the RUT loves to do. I think the odds favor a 5 wave move up because should we get a sharp 10 point pullback in wave 4, people will be falling all over themselves to jump in and get short at the bottom of the channel, which makes me think the RUT will squeeze the shorts one last time before we tank. One thing to note the indexes have not broken down below their 200 day simple moving averages so do not get caught holding shorts should the indexes blow past their 61.8% Fibonacci Retracements because if that happens the bulls may very well be back in control.

Choose not to fall

Alternative SP500 Target

An alternative target of the SP500 would be 1095'ish. Assuming we have an ABC up off the lows of a few days ago...wave A measures roughly 35 points, wave B measures about 20 points and with wave C being equal to wave A, that adds another 35 points off the wave B low brings us to roughly 1095. This would be an objective area to scale into shorts with an appropriate stop.

Market Update

Markets have run, with the small caps outperforming...but for all the noise - not much has been accomplished. Below is an update of the SP500 chart I posted earlier. We appear on target to reach the ideal levels in the 1085ish area with this short squeeze rally. There is some minor resistance shown in the chart above those levels as shown by the horizontal levels.  The Russell 2000 looks like it wants to reach its potential. I have not included an update for that index as nothing has really changed.

Below is an example of the RTS system (Real Time Swings Advanced system) run on the SSO today. That resulted in a short for around $600 and a long for $1500 for a risk allocation of $500. RTS finds real reversals on any chart type in real time and suggests entry prices, entry stops, trailing stops along with appropriate position sizing for risk management based on the trade potential.

Where we stand

Bearish Rally Signals are being generated...and market structure seems to be complete or in a completion phase. A-B-C bounce has set up nicely on RUT and matches high probability targets. As a secondary potential the same target areas could be met with a 5 wave wedge rather than an A-B-C pattern. The important thing is that we have triggered resistance signals already and it seems do not have that much more upward potential.

Market Update

Market Cycles caught the move perfectly as you can see form the updated chart. Swing Levels gave us the correct target area for the lows and the End Of Bear Cycle triggered indicating a completion wave was occuring. Bounces to 1080 to 1086 are now on the table.

Bearish Rally Action for SP500

SPX setup for a reversal . When a Bearish Rally Signal is triggered by the CycleAnalysis tool ,we should see at least a little pullback prior any attempt to break the marked bearish rally resistance level. Usually, a resulting rally is a failure. Failure targets 1039 on the SPX with upside to 1114 to 1118 as upside targets.

Social mood shift - the prom

Apparently educators nationwide and administrators at a Wisconsin high school reflecting the shift in social mood - so they are aiming to curb risque moves at the upcoming school Prom. I wonder if the trend toward socialism will extend into more extreme manifestations. But this trend is not good...These kinds of shifts reflect qualities that are not for the economy, the government and most of all the people.

"To assure that Union Grove High School students do not get too footloose, school brass have issued official dance rules for the January 30 winter formal. As seen below, the rules outlaw "sexual bending" and the touching of breasts, buttocks, or genitals. Leg straddling is also verboten. Additionally, students are on notice that "Both feet must remain on the dance floor at all times." Which appears to rule out performances of the Charleston, Electric Slide, and Cha-Cha. The dance "will be videotaped to insure the safety of all students attending," the rules note, though Union Grove administrators could presumably review the film for provocative moves that were initially missed by monitors"