Check out Sept, Oct, Nov 2010 For a Decent Proxy $Study

Around the Globe

Asia – CLOSED
• Shanghai (China) Closed (what is China going to do when it opens? Gap up 3%?)
• Hang Seng (Hong Kong) +1.63%
• Nikkei (Japan)-0.39%

Europe as of 7:28am EDT

Today's Economic News:

• DAX (Germany) +1.28%
• FTSE [UK]) +1.03%

We can almost count on the UK to disappoint.  Germany another good read and the USA has some ‘splaining to do today.

Quote of the day:
Politics is supposed to be the second oldest profession. I have come to realize that it bears a very close resemblance to the first. – Ronald Reagan

Current Allocations from our room:

Performance Month to Date from our room:

Current Breadth Readings:

ES SP500 Futures Comments:

TLT Twenty Year Bond EFT Comments:

A breakout Fed day put the breadth score up to 16, a 10 day cycle hit was missing, but they are flat and just sliding along.

We can't seem to help ourselves.  We continue to like to short the highs for these 0.5% gains.    The short area today is in the 1329 to 1333 range, but truth be told, we like the short here pre-market even.   Another higher high is likely so we are holding back.

The volatility to the upside is so small that being short and wrong is a slow torture as opposed to getting you legs sliced.  Today we need to plan for one of three scenarios.  1). A sell-off from the open putting in railroad candles and a complete retrace of yesterday. 2). An NR7 consolidation where  the market holds in a tight range and reflects. 3). A follow through day to the upside where the market gathers even more momentum.

Of the three we like number 2 the best with a trading range somewhere between 1329 and 1320.  We think a run to 1329 will capitulate so we want to short in that area.  We will let the first hour set up the upside range and use our buy/sell pressure indicators to indicate turning points.

US Dollar DX Futures Comments:

We found ourselves fighting 3 wars yesterday with an attempt to long the dollar and short the ES and TLT.  The dollar battle ended neutral when a nice bounce let us out. Now we stand aside and watch how much of the magenta line gets retraced watching the 78.70 area in particular.

The TLT behavior had us scratching our heads, but soon we came back to reality of higher interest rates despite the Fed.  Short wise we should be light now as we consolidate in the 116 area with a possible bounce up to 119.  We will get to 111 at some point and as TLT has shown us, the drops can be very fast indeed.

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