12 DEC 2010, Sunday

• Aaahhh...dare to dream!  Is equal justice under the law even possible any longer?  Or is it called white collar crime because they're the good guys???  Failure to prosecute fraud will only prolong our economic woes.  Unfortunately, that seems to be the path our leadership (if you can call it that) has chosen. 
• Now...where are we?

• Above from http://www.bespokeinvest.com/.  White line is the 50 day moving average, bottom of red is 1 standard deviation, top of red is 2 standard deviations and black line is SP500.  I'll put a similar chart to this on the sidebar.  Currently, I have one over there called SP500 Daily w/ Envelopes in which the red Keltner Channel is the longer term one (similar to the 2 Std Dev above) and a much shorter term green one.

• Above is the difference between percentages of bullish and bearish newsletter writers from Investor's Intelligence.  Lots of bulls and fewer bears out there.

• Above is an interesting indicator from http://www.sentimentrader.com/.  Self explainatory.

• Above, again from http://www.sentimentrader.com/.  They track a lot of different sentiment indicators and the chart reflects the percentages of bullish, bearish ones and the spread between the two.

• Above, speculative call (leveraged for the upside) buying is at extremes.  Past examples are also highlighted courtesy of http://cobrasmarketview.blogspot.com/
• SP500 fundamental valuations never really got shellacked like in a big bear market but that hasn't mattered at all during this upswing and they are currently factoring in "paradise is here" again, it seems.
• You can check other charts in the sidebar.
• All of the above doesn't mean it's necessarily going down.  This market has proven that it will do whatever it wants to do.  As it should be...since price is the only thing that matters.  We just pick our direction and see how it works out.  And afterall, there's always the Santa Clause Rally!
• However, if you are a monthly dollar cost averaging Buy and Hold Investor, I'm just trying to highlight that there are times to add and there are times to wait to add.
• Levels I'm watching...1245 (there now), 1290, 1310 to the upside.  To the downside, the recent November low at 1173 is the immediate level that must hold. 
• As to me, again, I do not trust this market and will continue to defensively trade it, only.  Especially, when it gets into the overbought areas highlighted above.  
• I still think we're in a Secular Bear market and this upswing is a Cyclical Bull move.  
• The only thing, I'm interested in holding will be a downside position when the time comes...possibly getting close (note levels above).  Tried in OCT 09 got stopped out, in JAN 10 did OK, APR 10 did good until I tried to get cute and buy too early (on the day of the Flash Crash as it just so happened) still did OK.  After the Flash Crash I went into trading mode, because I anticipated a higher level of volatility, and have been there ever since.  Glad I did because the market hasn't made a lot of sense / trades differently since then...at least to me!