Weekly Update 04-26-2010:

Here is a quote made just this morning from Mark Cook, who is a 30 year investment veteran with many awards, including being written up in the book Wall Street Wizards as one of the best investment experts in the world….”This market has entered into the most treacherous waters I have ever seen. They are exceeding the 1999 exuberance in point move and sentiment complacency. My 30 plus years trading has alerted me to potential danger signs and this is a massive red flag. No one believes that this market will have a monumental correction but I believe it is inevitable.”   I agree with Mark, even though waiting for this top to complete is taking a toll on my patience.  The market is still demonstrating “topping” type action, but has been now for quite some time.  The rally last Friday was composed of at least half of the “buyers” being people who apparently have come to their “pain threshold” and are covering their Short positions, which is often times also a sign that the market is near “capitulation” as the final pushes upward also exhaust the patience of those who are taking a position expecting a decline.  It seems as though the market likes to frustrate the maximum number of people that it can before making its most “technically probable” move.

The move up on Thursday and Friday of last week put the market up 3% above the previous high set on April 16^th, which is reaching the maximum of our “patience tolerance” for this anticipated move to the downside.  Therefore, we are giving the market some time to see if this move was a part of an exhaustion top that will quickly bring in some downside action or not.  Further adding to that possibility is that Friday was one of the 4 or 5 “reversal day indicators” that we get each month, that are not long term indicators, but only indicators as to the expected movement over the next two days and in this case the expectation is down.  These indicators have had about 80 % accuracy.  They do not predict long term moves, however our other indicators have been pointing toward that and long term moves start with one day, so we will see if that materializes before taking any further action.  If it does not, than we may need to step aside to CASH and wait for actual “price confirmation” which in that case we would miss possibly the initial few days, which in some cases can be significant.  We will keep you posted and let you know what may materialize.  Until then we will remain in our SELL position with an expectation of a “profitable” result.  Yours for Safe Sailing in Bull and Bear Markets.