Big Ben

Image courtesy of FreeFoto.com

Ben Bernanke is set to give his Jackson Hole speech today and according to the futures, the markets are expecting him to do something big. As of now, the losses from yesterday are all but wiped out and that's before the speech. If Ben does say anything of substance we could have ourselves a massive day.

If your long, this all looks and sounds great. I'm not buying it -- maybe that's because I'm currently short. On the other hand, when looking over the data for the past week or so I'm noticing weakness all other. In my opinion, it would take a great speech by Bernanke to revive it but I don't see it. This is probably the Fed's last round of ammo and I just don't see him using it right now. The economy is not in great shape but it's also not in a free-fall.

I will remain short until at least the end of the day. If the Jackson Hole speech causes some ruckus in the market I'll look to get long, but at this time, I'm not expecting too.

Down She Goes, Right?

I spent the weekend gathering data to give me a better view of the market. Think of standing on a big hill looking over things instead of standing in the middle of the city street watching cars and people go all around you. When you're right in the middle of the action it can be hard to see what's really happening, you get caught up in the commotion. Taking a few steps back allows you to remove yourself from the day-to-day hussle and bussle.

When I completed this task I noticed the market has actually been growing nicely for the past 3 months or so. I also noticed it has started to weaken over the past week. Looking at past data shows after an 8 - 12 week upswing we're probably in for a multi week correction.

I sold 25% of my 401k account. I would have sold 75% - 100% but I can only trade a fund once every 30 days and I bought it about two weeks ago. That means I have to wait two more weeks before I can get out of that position.

I'm also short the market right now. I'm sitting in DUST and RUSS. RUSS is definitely weak and should continue down with the market. DUST on the other hand is a bit riskier. It has been known to go against the market but after looking over it I feel confident that is has room to move down.

Creeper

The market continues to creep higher. This rally has been extremely strange and very hard to trade. My market timing works best when the things are volatile, not when there are small up and down days.

The plan remains the same, I'll trade the way the tool tells me too. In the end this may be good for me as it may strengthen my ability to control my emotions.

I'm long EDC at the moment. The market continues to look weak, so who knows how long I'll be in it.

Weakness...

Not market weakness, but my weakness. After a series of small losses over the past few days, I went long yesterday afternoon before my timing tool said to. To be fair, it was on the bubble of turning green, but hadn't done so just yet. I also try to trade only late in the day and this I bought somewhere around 1:00pm.

This is a weakness that I have. I always jump the gun and pay for it in the end. There's a chance it may work out this time, but it's still no excuse. I may try to analyze this situation and write a longer post about it.

In any case, I'm long SOXL. I still don't think the market has much upside, but maybe I can get two or three bucks out of it.

5th Day of Correction

Tuesday was the 5th day of the latest correction. It was another very blah kind of day. The markets were up for most of the day before a late collapse and then a last minute buy that brought them back to about breakeven. My timing tool shows it as a weak day, similar to the last few days. I'm hoping for a big down day before it shoots up to challenge the latest highs.

Switching to GASX

Even with the end of day rally, the market remains weak. I'm switching to GASX, the weakest of the 3x ETF's.

Eeny, Meeny, Miny, Moe

That's basically what the market has been for the past three or four days. My timing tool is still showing the market as weaker, as such, I'm still short. I did switch over to RUSS on Friday, although I now wish I would have stayed in EDC. I may go back to EDC today. We'll see how the day ends.

Various blogs and news sites feel the market will continue to go higher from here. I'm not seeing it. I will say the market has held up well these past few days, but I feel that over the next week or two we will be lower than we are today. I do think we will get a one or possibly two day bounce this week, but I think it will be more of a fake-out before the big selling comes in.

I have not been sold on this two month rally (I'm not sure you can call it a rally.) We never hit a bottom at any point before that. It came close on 6/4 and a another day or two of selling would have been great. Instead the market bounced up and we are where we are today.

I'll continue to rely on my market timing tool. If it does reverse to a buy I'll trust it and get in.

Which Way Do We Go?

I ended up staying in EDZ yesterday. I was monitoring my market timing tool very closely around 3:45 but it never gave a clear buy or sell. Since the indexes never moved up after 1:00pm, and actually had a weak close, I decided to keep my short position.

I will continue to keep a close eye on things today, looking for some kind of signal, either long or short. If I had to make a prediction I would say we're headed lower next week. We're oversold and one of my indicators is getting very close to a top. Although, it can hang around up there for a while before reversing. That's why the timing tool has a set of indicators that all must switch.

Stay the Course...

As mentioned in the last post, the market did indeed turn higher.  It's struggling to stay afloat today, but I think it probably will end positive or very close to it.

I made a crucial mistake late in the trading day yesterday.  The market looked like it may start to roll over.  I was in GASL and it was coming back down to my buy price.  I had a stop in place a few pennies above that but decided to sell and make a very small profit.  My main reason for doing this was my market timing tool was getting very close to a sell.  If the market continued to go down the tool would definitely told me to go short.  I've learned, or at least experienced, many times that nothing is 100%.  The market decided to end the day higher and my market timing tool stayed positive.

Selling GASL wasn't the worst trade in the world.  My big mistake was what I did next.  Feeling the market was rolling over I bought EDZ.  Sure enough, I was quickly in the red this morning and although the indexes have been around breakeven all day I'm still down.  Meanwhile, GASL has been up 4% - 5% most of the day.

I now find myself in a tough situation.  If my timing tool stay positive today, I have to sell EDZ.  The problem is it's probably too late to get in a bull ETF.  This may mean I miss a big run.  What I may do is take a half position in something at the end of the day.  We'll see how we finish.

The lesson learned is don't jump the gun.  Many things happen during the day.  Wait until the last 30 minutes and place your trades according to what the timing tool is telling us.  Don't try to predict how the day will end.