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• Today's Economic Calendar
• Overnight Market Updates
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Around the Globe

Europe as of 6:37am EDT

• DAX (Germany) +0.70%
• FTSE (UK) +0.33%

• Today's Economic News:

In the USA watch those initial jobless claims coming out at the same time as the GDP revised, looking for a bounce up in the GDP. Don't forget at 9:42am ET the leaked PMI number is out, I will try and get it out to you early today.   German unemployment was a bit of a disappointment missing on two fronts.   The tick down on the shorter term 2 year has us concerned, we would like to see that money in the equity markets not bonds. 

Quote of the Day:
Human beings are the only creatures that allow their children to come back home.
–Bill William Henry Cosby

Current Breadth Readings: (click here to see all our breadth charts)

We are showing the Fat Lady again today. Remember the cross that made us bearish yesterday, ahead of a huge day up?  We she is still bearish and will remain that way today unless we get a decent follow through day and more upside gain.   We are trend followers and we can get chopped too between trend shifts, so stay tuned.

ES SP500 Futures Comments:

Short: 1522
Long:  1470

I keep getting questions about the trade I am setting up, so nothing speaks better than a chart right?  First you need to understand that this is a multi-week perhaps month trade, this is not a quick scalp. This is a swing trade setup by a signal in a trend reversal that should give us a 8 to 10% correction.  That is the basis of the trade. It might be wrong, it might be right.

I don't know when the next top will fail but my predictions yesterday were somewhere between 1505 and 1542.  That is a very wide range.  I know my dollar risk, that is the amount of loss I can take on a single trade like this and still have money to live.  I know my outside range is 1542.  I know I have to plan my trade out so that if I am wrong and we get above 1542 I cannot have exceeded my cash lost limit.  I also know that I have been tracking this trade for a long time and I don't want to miss out so I need to be involved starting at 1505, so I make my plan.

I have a very very light entry at 1505 so that I am at least into the trade and then I find other areas that I think could be good reversal areas, yesterday that was a second add in the 1512 area which I did.  I am now effectively short from around 1509.50 (the second add was a bit more leverage).  I am underwater but still sitting comfortable in my risk area. 

There are three upside resistance areas for us:

• 1520 – the lower high trendline
• 1522 –  Today's high extension number
• 1525 – the previous pivot high
• 1530 – the globex high
• 1542 – the extended high target

Those are my markers and I will pick and choose additions if needed in there, but as of now I am not fully committed fund wise to this trade.

I remain comfortable with what I see in the breadth charts, but if the bulls can really follow through today and close on the highs, I will have to take a deeper look and possibly bail, realizing that the markets did their 3% correction and now want to extend another leg higher.  As of now I don't think that is the case and am targeting a 8 to 10% correction.  Today's target downside area is 1470, we don't' think we will get there obviously, but this volatility is creating some pretty expansive ranges.

One area to watch on the downside is 1425 which is the New Year's gap that just might need filling.  Image the headlines if the S&P goes negative on the year!

One other note to the readers, our natural state is bullish and we don't tend to talk our book, we tend to stick at looking at the economy as growth == good and contraction == bad.  So when we say we are looking for good numbers or we like that number, that is our bullish side talking not our current bearish facade.

I hope that makes reading and understanding this column just a bit easier. You can always reach me marlin@redliontrader.com

US Dollar DX Futures Comments:

Talking to the MrTopStep Forex team yesterday, everyone seems in agreement that the dollar is destined to go much higher.  It is expected to rotate into the best of the worst scenario.  We were a bit surprised at the little reaction to yesterday's equity markets move and think that the dollar just might be ready to run the top again.  Our extended target is 82.15.  

TLT Twenty Year Bond ETF Comments:

We like TLT up to 120 from here. 

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