I’ve never referenced the Mexican Market in relation to the S&P – very interesting concept.

What worries me is the overwhelming bearishness out there among many professionals and other blogs. It’s almost like it’s a certainty that the market will go down next, and I see that too.

However, because everyone is so bearish, it almost makes me suspect that the market is about to pop strong to the upside, which would seem to be a logical course of action, provided the Elliott interpretations and the “hope” stemming from the Inauguration, etc.

I wouldn’t swing-trade either way because the market is at a precipice – one nudge and we’re off to the races due to the Price Expansion/Contraction principle (price has spent a good deal of time contracting recently, building steam for a big move).

Plus it’s a new year and funds are still figuring out what to do.

For me, I believe the big move will come not from intelligent analysis, but from one side of the market being squeezed like heck and having to bail on their positions, creating momentum which will embolden the other side.

… we just don’t know who’s going to be squeezed yet.

I am Joe from Hungary Europe.
I follow your interesting market interpretation
occasionally and congratulate on your ideas and great
work that you presen on this blog.

Regarding the SDS (And this is also valid for the
NASDAQ100 Ultra short (QID) the Chart is Not perfect.
You can see the Big Gap on Dec 23.
That was because of distribution of funds to the owners
of these instruments.
If we eliminate that from the Charts and move all Canle data Up the same percentage value as the size of that Gap and calculate all indexes with teh modified values, than we get a picture, that is more close to the real status / sentiment of the market players.

QQQQ / SPY did not have this gap (distribution) on the same days in December.

Have a great and successful 2009 Year!

Joe

ps: Actually I lived and worked in the US (Princeton New Jersey)for 6 years and my US stock market enthusiasm dates back from that period.
in the nineties,

I’m not saying we’ll break it immediately – there will likely be consolidation, but it looks like we’re due for some sort of expansion move up or down soon – breaking down from here would confirm a “bull trap” which would cause downside pressure quickly due to a large number of stops being taken out which would trigger additional shorting and set up a test of the lows.

Also, according to either interpretation of Elliott Wave (that we’re in a 4th), we’ll test/break the lows eventually.

I would agree with that.

We’re certainly not at a bottom and it would surprise me beyond belief if eventually we don’t take out the November lows, but I do think there’s a great chance for further upside, perhaps even to 1,000. Beyond that would force a reconsideration of opinion.

Looking good in SOLF as long as we hold the daily 20 EMA.

There’s so much setting up right now with a similar structure that it’s quite amazing. All these markets need to hold their support or we push to new lows in most of them I suspect.

Would be indeed from a risk/reward standpoint.

I’m not necessarily saying we’re definitely headed higher on UVU or SPY or DIA, but that the risk/reward is favorable, especially now. If we break below the 50 day EMA – and I don’t mean by a penny but by 25 cents or more – then odds will shift to favor downside prices but there’s a decent chance (greater than 50% probably) these levels will hold, and if they do, your upside target will be far greater than your downside stop, creating a low-risk, high(ish) probability trade idea.

Is UVU a good buy at this level?