I'm back !!

Friday is US jobs numbers... Sell first then think is the theme.

Market volatility is here for a while. Lets buy some VXX (CBOE Volatility Index) and TZA (3 times bear exposure to Russell 2000) today !!! Hold tight !!

If S&P test the 50% retractment which is about 100 points away, the VXX might get to $65-ish and the TZA maybe gets to mid $20s.  This was the mid summer range last year.


Watch out for earnings forecast and pre-announcements during the next few weeks. Q2 earnings should still be good but it is the future growth that the street will focus on. 

Be careful out there... it is going to be a trading range summer but I think the low end of the range will be expanded downward. Likely 1075 high and 1000 low but testing 950 somewhere.  Euro is still in trouble and Spain was downgraded today. Watch out for the other PIGS (Portugal, Italy, Greece, Spain) and Greece's upcoming news on their debt.  Maybe a European bank is on the wrong side of things and a domino effect will scare the market. Remember the guys at the banks are not that smart... they all are a bunch of dumb cows in a big herd. Goldman is the smartest and they are getting jumped on now.

China slowdown fears hit global markets

The global economy roiled world financial markets Tuesday after a report on leading indicators in China was revised lower.

The Conference Board, a New York-based research group, said its Leading Economic Index for China rose 0.3% in April after an increase of 1.2% in May. The group originally reported a 1.7% gain in April, but that was revised lower due to a miscalculation.

China has recovered strongly from the global slump in 2008 and 2009. The nation's economy expanded at a nearly 12% rate in the first quarter of this year, driven largely by industrial growth and retail sales.

That has many investors looking to China and other emerging economic engines to power the global economy. 

China has become increasingly important as economic conditions in Europe have deteriorated and the outlook for U.S. growth has come into question.

"If these numbers turn out to be true, that leads to questions about how strong the global recovery will be if Asia is not participating," said Ryan Larson, head of U.S. equity trading at RBC Global Asset Management.

Bearish Sentiment

Given the recent market weakness, it's not surprising that bearish sentiment among newsletter writers is near a 52-week high. According to the weekly survey from Investors Intelligence, bearish sentiment rose to 33.3% in the latest week which is the highest level since July 2009. Although bearish sentiment is on the increase, a plurality of advisors still consider themselves bullish (41.1%).

another confirmation but using Dow Theory... Dow 8,330?

This chart displays a critical reason why we would be bearish on the market at this time. The dashed black line extending from B1 was supposed to be the upside target from point C1 calling for a Dow at 9800. However, neither the Industrials nor the Transports were able to come close enough to be misinterpreted as an indication that the bull market run was likely to continue. The inability of the market to breach point B1 was a major non-confirmation according to Dow Theory.

Simultaneous declines of the Industrials and Transports below the yellow zones on a closing basis would tell us for certain that the bull market has run its course and that an additional correction of 15% on the Dow Jones Industrial Average is likely.

We’re being generous by not considering the June 7th lows for both indexes as the critical points for a bear market indication. For some Dow Theorists, waiting for the Transports low on February 5th is akin to playing with fire. However, we must adhere to the extremes to ensure quality buy and sell signals.

The only holdout is that either the Transportation Index or the Industrial Index gives us a downside non-confirmation by not going below the Feb. 5th or the June 7th lows, respectively. If we get a downside non-confirmation then we will consider selling a small portion of the portfolio on any strength.

Courtesy of Dividend Inc.,  a contributor to the New Low Observer (www.newlowobserver.com), 

S&P 500 testing 1/3 pull back from 666 low to the 1219 high. Today 1035 is the magic number