Week In Review

It was a short trading week but an interesting one. Our short-term and long-term indicators have flipped to the downside. The fiscal cliff is still undecided and is starting to really affect the market. The VIX is rising which means bigger swings in each direction.

Our short-term (MTT) flipped last Friday and the long-term indicator flipped on Monday. This means we'll only be going short when the MTT tells us to. We'll stay out of the market when the MTT goes long until the long-term indicator goes green. Right now, I'm 100% short.

The fiscal cliff is playing games with the market. Any little news is moving the indexes in both directions. We'll probably have more of the same next week. I expect Congress to pass something next week or early the following week. This should have a positive effect, moving stocks up, but I don't think it will last. We could be going down for a while. In the end, we'll follow the MTT for our trades.

With the fiscal cliff in flux the VIX is rising. A rising VIX means major swings in both directions. This can play mind games with traders, but all we're going to do is follow the MTT. The long-term indicator very rarely flips do to a one day spike so we should avoid the whipsaws that affect so many.

The moral of the story is to follow the MTT. We'll stay short for the time-being and capture any profits we can.