Weekly Update 5/17/2010:

The market still appears to be establishing the 4/26 top of 1219 in the S&P500 as it proceeds to establish “Lower Lows” (5/6 with 1065) and “Lower Highs”.  Currently it appears to be working on establishing the “Lower High”, which was either established last week on Thursday with an intraday high of 1173 or the market will bounce again here early this week to establish another high.  As long as it stays below the 1219 high of 4/26, then this intermediate downtrend will have a confirmed “Lower High”.  Then the next move in the confirmation process would be a move lower than the  5/6 intraday low of 1065 which was the “1000 point move on the Dow” day that “pundits” were trying to excuse away as a “technical” glitch.  Well so far the SEC investigation shows no proof or indications of that.  In my opinion that day just shows how “vulnerable” this market is in terms of “downside” risk, which is why we persisted in maintaining our short position as long as we did.  I believe that this 1000 point “shot across the bow” was just a “preview” of “Coming Attractions” and demonstrates the potential for a much longer term down trend.  We will continue to monitor this development and let you know if any changes need to be made.  Until then, we will remain in our SELL position.  Yours for Safe Sailing in Bull and Bear Markets.