1 reply to this topic

[arbman]

I sold the bounce per my analysis over the past 2 sessions and covered here due to the technical divergences. The tech and small cap indices outperformed the major markets in price while the internals are now extremely oversold with the divergence in the implied volatility indices. Most of the indices managed to put a higher low as well, however the risk here is one more capitulation in the tech indices tomorrow.

A secondary high has much higher odds according to my recent pattern scan (that I posted here) for the next few sessions according to the bounce potential from the 50 (and a few other short term) dmas. The odds still favor for the lower prices thereafter over the next 15 sessions.

To summarize, the data I am looking at says any decline does not have the potential to have legs before a significant bounce and the odds favor a better bounce than what we have seen for the last few days unless the market accelerate lower significantly (crash). I do not think a crash has the highest odds here since the market is rather very near its recent highs, there is usually some buying enthusiasm at these junctures.

I will be going fully short any rally beyond 2-3 sessions with any deterioration, however I am prepared to take some heat there. The market is approaching an important inflection point; while it is rapidly depleting its last bit of liquidity, there is not much important liquidity coming for the intermediate term, this will continue to result a volatile environment rather than a decline straight down for the very short term, imho.

Good luck,
- kisa

Edited by kisacik, 12 June 2007 - 05:00 PM.

[arbman]

Correction here: the small caps did not outperform, actually they were the worst, the intensity of the decline was much smaller than the other indices, that's all...