I analyze macroeconomic issues from a fundamental perspective, and I analyze market behavior from a technical perspective. Original macroeconomic analysis can be found here and both macro analysis and commentary can be found on my Caps blog. If you like or appreciate my analysis, please add yourself to my Following List

Monday, November 21, 2011

Nov 21

First things first:

My 60-min Trend System issued a cover short signal (** not really, see below). See here and here. (These updates are sent out as part of my Trend System Notifications).

But not really.

I have a short term divergence in place, but it is not an official cover signal. I am actually still expecting a lower low to take place before a tradeable bottom. My main 60-min indicator has most definitely not bottomed yet.

So why the cover signal?

1. Gap down Monday open gives a nice cover opportunity
2. This is Thanksgiving week. It will be light volume and likely lots of out of nowhere reversals.
3. I am leaving mid-day Wednesday. So while we might get a lower low (like my indicator expects) it might happen while I am out.
4. Based on observations 2 and 3, we might have a rally the rest of today/tomorrow. So this is likely the best obvious opportunity I will have in the next 2 days to lock profits.

I am completely happy being neutral the rest of this week.

If we get a very compelling bottom by Wednesday morning, I might consider going long (since we have highly bullish seasonality Wednesday and Friday), but it would have to be very compelling.

So as of right now, I am in wait and see mode, and not looking to jump into anything before next week.
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