Mar 15th

Another warning shot today:

( Flashback: Bear market ends when walmart breaks down)

Going by the same token, walmart is breaking out, we are cautious.

4:20 p.m. We got our first signal today to go short the market. We put on a short position in SPY.

New high

Too easy for the SPX to fail here. Also too easy for the SPX to fail immediately after making a new high. Two pieces caught our attention today

o C (citigroup) trading >200M shares in the pre-market. This is greed taking over. Chasing is going on all right.
o The greek minister saying everything is over and greece is an isolated case. When it is officially denied problems are officially confirmed.

This is just a matter of time now. Price objectives will be met with new highs. We are sure will see a Put call ratio of less than 0.55. We will initiate our first short position then.

March 5

We missed the rally since March 1. Our thinking of a decline from Feb 24 was wrong. But as the last post says, none of our indicators have flashed a sell signal yet. Stockwise, scrips like GOOG, GS are rallying all right but we don't understand the technical strength behind these moves. We don't recognize those patterns and so have not played them. There are still a few junk names like CBS, PERY, WGO which fit our setups. But we have missed them.

What next?

There is something very key going on here which we view as a trapping process. Stocks like GS which did not rally until feb 25 have caught up. Ones like AMZN which rallied earlier are not participating. There are very few technical setups in our scan of charts. Bears who went short around Feb 15 are being forced to "hedge" putting on risky long position. In other words, the tape is making people chase, but these are not technical setups. The chasing could take a while to complete. What is bearish would be volume cum breadth expansion accompanied with price contraction. This would mean larger (broad breadth) volume bars but smaller percentage up moves. This is what occurs when chasing happens. People just want to own a stock.

Bottomline:

We are setting up for a fall alright. We missed this rally but are not short either. It is only time before this chasing game turns sour. Our best guess at this point is for a down cycle to get hold by the 2nd week of march. If that occurs, we can have a bumpy april, may, june.