Weekly Update 02-22-2010:

When we went into our SELL position recently, I mentioned that the market could have a little bit more of a bounce left to go before turning.  The bounce up that the market is taking from the S&P500 lows of 1045 to close last Friday of 1109 is about a 60% retracement of the recent downward move from the high of 1150 set on January 19^th of this year.  It is very common for a “corrective bounce” to retrace between half and two thirds, the technical terminology are Fibonacci retracement levels of 50% and .61%.  The .61% level would be above 1110 in the S&P500.  We entered when we did thinking that with the then current negative sentiment of the market that it might not be able to even exceed the 50% level that it had repelled off of the week prior in the range of 1105 which at that time represented the 50% level of the current downtrend. However on this bounce it has exceeded the 50% level and approached the .61% level of 1110 with a close last Friday of 1109, therefore still closing on a very common retracement level even though a bit higher than we had expected.  However, the market moving back down from this level would appear as a very common retracement level still on track for the expected downturn.  However, if the market is choosing to retrace higher before its ultimate descent, we may choose to step aside to CASH temporarily as a risk control measure.  If it chooses to move higher from this level it may very well try to retest the 1150 highs and in that case, we would rather re-enter at that level if all else seems to be in place.  However, the market is very over-bought here and seems ripe for a move downward, so we will retain our SELL position to take advantage of this move.  We will monitor it closely and keep you posted.  Yours for Safe Sailing in Bull and Bear Markets.