May 1

11.00 a.m. Covered some GILD from 47.5 @45. Will add some more higher. This bounce is working off the hourly oversold condition.

11:40 a.m. Add some short GILD at 45.35. Started a small position in UNG. We don't know if the bottom is here. We will bail if the LOD is broken. To us, it looks like accumulation is going on. For conservative traders (in natural gas it is wise to be conservative), wait for consecutive closes above 50d.

4:10 p.m We are now very overbought, so the market may have a pullback into the week of May 11th, our cycle turn (potential low). We are bullish into june. Technically, volume is waning, both on the upside and down. So the old norm of SPY 200M is a highly liquid day volume wise. It is very rough to play against the trend, the trend is up and we don't want to micromanage every turn. We find quite a few (including ourselves) traders expecting a pullback since the market is overbought and trying to time the pullback with a short position. It is much easier to buy the stock and forget until we see signs of exhaustion or excessively positive sentiment. On the commodity side, silver, gold are looking vulnerable. Natural gas had what we call a super double thrust. Two days back to back with increasing percent gains on increasing volume. It looks like accumulation is going on in natural gas. The area where this has occurred is 3.2 region. That should not be a surprise to us, given the 20 yr trendline. That being said, the test for natgas lies ahead at the 20d and more importantly the 50d.

Sentiment wise, (at the risk of being contrarian, which comes easily to one and all :-) ) we are beginning to hear analysts coming out of the closet and call for SPX 1000 or so. But there are still some doubts lingering in minds of newsletters like CNBC, WSJ and calling for the next shoe to fall etc. Stock message boards are still teeming with lots of people waiting for the big kahuna event. There are some who are caught with explosive short positions in FAZ, SKF, TZA who are brimming with cynicism. This what the rally needs to keep going. Before we reach a substantial top into which one should turn aggressively short, we will probably see the fabulous four of Summers, Geithner, Bernanke and Obama ordained for pulling us out of this recession. Think of it as follows, the more optimistic news we get, the closer this rally is to its end. As of now, people don't seem to have forgotten the crash in sept-oct 08 and are still ginger about it. Maybe it really takes a coppockian 11 months for another crash, a wave 3-of-3-of-C(3?). If and when that happens, that will be a bigger crash than the crash of sep 08.