November 7 - November 11

The U.S. market was able to shrug off concerns in Europe and rally following the European close. We saw several instances of plus 1000 ticks happening after the European close, but not before. If there would be better than expected news from Europe we could see an overnight power rally and this would fry the shorts. A strong close that carries above 1260 should create some additional inertia. It appears that the bonds are lessening in their energy but are still being manipulated upward. Not closing above 143 could turn sharply to the downside. This type of market is exhibiting a tendency to not allow shorts to make money while patient longs are always rewarded. The advisory recommendation to buy the S&P at a minus 1100 tick for 3 points with a 6 points stop was reached. The cash register rang as we profited from it. We are within striking distance of the 1290 earlier highs. This is a key point as far as an intermediate resistance and just above at 1300 is a psychological resistance. The bonds just barely missed our sell point. This is showing a deterioration pattern with lower highs from Monday and a tendency to have an afternoon hole. The lows of 139 ½ seen previously are on the radar now for the bears. There was an incredible high minus tick Wednesday afternoon. The duration was long, which makes for a quick oversold condition for the short term. The European fears persist and now it is creating anxiety that is triggering sell stops. The environment is creating international mystery. European economics have never seen this type of uncertainty with politics playing a key role. This will take awhile to settle but the results of the worries will not be manifested much worse than they are now. The market is very afraid and this is taking worried longs to the sidelines. We saw the S&P go significantly lower while the bonds did not take out the highs. This is showing that the fear factor that had driven money into bonds is starting to lessen. Any type of lessen of anxiety of Europe would pull the bonds downward sharply as they appear to be losing energy. The important aspect of day trading is always evaluating the environment on a minute-by-minute and hour-by-hour basis. Thursday morning’s market had another bear raid that erased the overnight gains. However, the legs of the bulls became stronger. Then there was elation. It rallied to once again bring the market into the green. This type of environment shows that strength is underlying. The fact that there was not a great deal of minus tick Thursday demonstrates that the selling is not that intensive. Our short-term advisory trade is still pending. An exit strategy for that position will be posted in our advisory soon. Apparently the full moon didn’t make the market act funky overnight. Are we on the verge of normalcy? I love a natural ebb and flow. This market has had to absorb bad news from the international front for literally weeks. Each time the initial new bad news rocks prices severely; the news is then slowly absorbed. Furthermore, higher lows are developed on a weekly basis. If that is the case this time we should see a resulting 30 to 50 point rally and perhaps more than 100 if there is no new Armageddon news items out of Europe.  The bonds failed by one tick from filling our short recommendation. Following that thrust the bonds dropped more than 1/1/2 points. They are not showing ability to hold rallies, but as of yet still have not broken key support at 139. Friday had some high plus tick with no high minus tick. It was very characteristic of a holiday. Hope you thanked a veteran. The thinness in the bond market was entirely because the government was closed. Banks are not participating, but rather sitting on the sidelines.