May 4

10:10 a.m. The theme of the spring/summer as we said earlier was upside surprises. This may be the last leg of the upswing, as we are breaking out of the last sector (in our opinion) energy. XLE is on fire and so is our LT pf of COP, BP, and other such energy names. We will start taking profits slowly now. Also adding another sliver of SPY short at 900.

12.45 P.M Sold PM from friday for a miserly 1.5% profit. The volume is too weak for a triangle breakout. Maybe we got too hasty. But we were not convinced one way or another. So we closed our position. The action in UNG is very encouraging.

2:40 P.M natural gas closed the pit session above the 20d. 50d has been the real challenge for this. But the volume is expanding and so is the size of the thrusts, looks quite promising thus far. The real test will come on the 7th - inventory day. We are hoping to have a disappointing inventory number. If natgas actually can hold onto its gains in the face of such numbers or even rally, that will be the best tell.

4.20 P.M No surprise an up day again. Just tells you the amount of shorts that had been caught on the wrong/early side and how much the doomsday psyche got ingrained into the society. The volume is indicative a waning short squeeze. We think it would be good to keep adding short slivers in SPY or other such stable index (with minimal slippage) for the counter thrust down. My astro friend traders tell me May6-7th is an important pivot day. We don't give much too much weight to astro aspects etc, but undeniably the rally is getting long in the tooth. Lets do some projections on XLE, the triangle breakout did occur, as expected. The width of the triangle is about 5$. There is about 1-2$ left on the upside left as per the projections. So there is not much left in it for a gamble. Tack on another 5% to the SPX. We get atmost 940-950, we believe that will be the maximum for this rally leg.

The risk/reward is now shifting favorably to the short side. We'll keep an eye/ear out for the sentiment. We are definitely hearing green shoots repeated increasingly. While the bears are still in denial and cries of PPT manipulation are still around, it seems like the squeeze is beginning to running out of steam. Meanwhile asian indices which have well and truly been the leaders are also beginning to tire. We could see a nice downdraft over the next couple of weeks. We'll refine our cycle model for the turn low later on after we see sure sign of a top.