The $NDXA50R,  $NDXA200R, $BPNDX, $NASI, and daily Full Stoch all appear to have rolled over from very near their historical highs and headed down while the $CPC has turned up. I would think the market would have a bit of a longer term correction here if I didn't know that Bernanke's QE2 was lurking in the bushes.

I've put on some small scout positions with bear ETFs and am CLOSELY watching price action. However, I won't be comfortable adding to those positions until you guys make a pronouncement that Mr market has topped and we can forward to a reasonable 5 to 15% correction. Assuming we really have seen the market top, how much further down do the indices have to go before you can make a proclamation?

Any chance that a mechanical system for trading SDS and SSO could be developed using this system? Seems to me that it should be do-able, but could very well be wrong.

Tim W

Since I'm one of the TRULY CURSED when it comes to trading the stock market, I'd be glad to take on some trading partners that would be willing to bet the exact opposite of what I trade and make a killing at least 95% of the time. In 7 years of trading I've had exactly one position that has gone up for more than a month. All the rest have been losers. (OBTW, that 1 trade is the UUP that I'm still holding since last December.)

I can't absolutely guarantee that you'll make money EVERY time, but it'll be so close to it that you won't notice the difference.

Please get in touch via either public post or private message.

Good article titled

Banks Can No Longer Sing

“What a Friend We Have in Washington” at url http://www.moneyandmarkets.com/banks-can-no-longer-sing-%E2%80%9Cwhat-a-friend-we-have-in-washington%E2%80%9D-37540.

Worth a read because it's what  most of us have been thinking about this correction for a while now IMO.

Tim

OK guys, here's the $64MM question. And even if you're only 50.1% sure of the answer, please try to provide one.

If you were a 401(k) trader, would you now be convinced that an intermediate term trend change has hit the stock martket and be buying the short ETFs such as SH, PSQ, etc that you have had posted for months now?

thanks in advance for an answer.

Tim

From Money& Markets:

Mutual Fund Cash Levels
Do Not Support this Rally
by Claus Vogt

Dear Tim,

As a group, mutual fund managersare as good a contrarian indicator for the stock market as they come. History shows that they hold relatively high cash levels at the beginning of a bull market. Then at the end of a bull market they don't have much cash since they're more or less fully invested. And if you look at mutual fund cash levels in relation to the S&P 500over the years, as shown in the chart below, you can easily spot this pattern. High Cash Levels in the 1980s, Low Cash Levels in 2000 Based on my research, high cash levels of more than 8 percent dominated the early 1980s until the early 1990s. During most of that time stocks were attractively valued, and they staged a huge rally from 1982 to 1987, and again thereafter. In 1995, when the stock market bubblebegan, mutual funds' cash levels started to decline in earnest, falling below 7 percent. By 2000, at the height of the bubble, they had come down to 4 percent. This was close to the low point of 3.9 percent reached in 1972 ... at the top of a bull market after which stocks lost nearly 50 percent. Today we know that March 2000was the climax of the 1995 bubble. And after going sideways for the rest of 2000, a huge bear market began, and the S&P 500 lost more than 40 percent. Low Cash Levels in 2007, And Low Cash Levels Now Despite those huge losses, cash levels did not rise by much. And after hitting 6.5 percent at the end of 2000, fund managers quickly started to put most of the entrusted money back into the market. By 2005 cash levels had fallen below the 4 percent boundary. And in the summer of 2007 they hit a record low of 3.5 percent. The market topped shortly thereafter and then lost more than 50 percent! Now we're seeing a similar pattern evolve: Near the stock market's low in 2009, cash levels reached nearly 6 percent. Then they rolled over sharply and quickly fell back below the 4 percent threshold. They are currently at 3.8 percent. Low Cash Levels Signal High Market Risk Mutual fundcash levels are not a short-term, stock market timing tool. However, they do give us another gauge to compare current market conditions to what has happened in the past. So are cash levels on their way down to 3.5 percent? Will they reach new historical lows in the coming months? Or is 3.8 percent low enough to signal the end of the current bull move? No one really knows for sure. But what I do knowis that it takes cash to fund a rally. And right now, historically speaking, mutual funds don't have much of it. To me, that's a sign of a very risky stock market environment. In the bigger picture I see the stock market in a secular bear market that began in 2000. And much higher mutual fund cash levels are needed before the next secular bull market can begin. Best wishes, Claus It takes cash to fund a rally. And right now, mutual funds don't have much.

is everybody else suffering from loss of Stockcharts.com charts like I am at about 2:15 PM EST?

tim

Can someone explain to me why the US dollar won't fall to 72 -- or lower -- like it did in spring 2008?

And continue to drive the stock market price up?

Tim

is that a double bottom at about 992 that I see on the intraday charts for $SPX? Could be.

tim

$VIX -- daily regression has turned up -- looks like 7-27 would be the turn date.

Sure starting off slow. Guess that it did after the 10/07 high was put in too.

Tim