May 8

10:45 a.m. Today is a potential important 45 day possible cycle top from the Mar 9th lows. Keep a look out for more clues about possible tops. On the stocks front, the last bastions "energy" are eking out gains while the higher beta nasdaq is losing it, which is expected and hence our short position in AMZN yesterday. We believe the 50d will be hit on this trip. That is when we close our short.NVS is acting sickly, we will watch for a close below the moving averages and then stop out. We don't think the market will crash back to the old low, at least not in one swoop. What is more likely in our opinion, is a lengthy 3 or more months of going nowhere and a trading range, to draw a right shoulder (look at a 20 yr chart of the transports (Our earlier post)). For now we scalp and play the ranges.

1:50 A.m (9th) We were away from our desk all day, so we did not trade today. Today finishes 45 days of a rally. The percentage of stocks above their 200d is upto 50% today. Percentage of stocks above their 50d is now 94%. The daily sentiment index (jake bernstein) is 85%. Talking heads are increasingly seeing green shoots everywhere. We have quite a few bearish signs, momentum wise. Probably the most bearish is the nasdaq not confirming the dow's breakout. The nasdaq has been the leader thus far, but as we noted it is energy which is leading this last thrust up. XLE has also tagged the 200d. We have a potential short term cycle topping 8-11th. We are not going aggressively short, we will wait for the hourly average to give way before entering a sizeable short. If indeed the market falls, the next cycle turn date is the 25th of this month.