The Day that Was - September 21st 2007

Good evening Rebels...

We were watching the markets today for signs of where the money was. Unfortunately it is still not moving into the financial sectors. We need the financials to show some solid strength in order for there to be a bull market. The run up in the indices today was mostly in energy, health care, and utilities. Common sectors for money to be moving into with a weak dollar and rising commodity prices (and fear of a recession).

The market is "floating" upwards. The required strength to sustain it is lacking still. Could we have put you into some swing trades? Sure, and we would perhaps made some nice returns in a few days. But without strength in the underlying fundamentals of this rally why would we put your money at risk by "taking a chance". You would not like us very much if we told you to "jump in" and then suddenly the drain was opened and the pool goes dry. There is nothing wrong with waiting for the right time to enter. It makes you smart! The others are taking chances and anyone that is loading up on long positions in the past few days may be in for a sobering surprise soon if the technicals prove to be correct and the market sells off again soon.

In any recovery from a market sell off like we have experienced over the past couple months there are always a sequence of events which take place as the market tries to reestablish itself. Each advancement will be followed by a reality check selling. And then another try at advancing again. What Lisa and I are watching is the levels of advance/decline ratios, volume, sector performance, commodities, and so on. While some people will just tell you "buy buy buy" just because they are hyped up following the FOMC rate cut is foolish. Those that have been around a while will sit back and watch the children frolic in the pool knowing all to well that they will be coming out of the pool disappointed because it got too cold. We will let the kids that their play time and when the time is right the pros will get in.

We are going to provide you with swing trade as soon as the market looks as if it can sustain itself. The market right now is being sustained on emotions, not fundamentals and technical indications. Don't be surprised if Lisa and I give you swing trades for going short! That's right, if we see signs the market is going to roll over hard we will be going short on the market. We will play which ever direction the market chooses to travel when it hits the gas...

More commentary to follow soon...