ETF SWING & DAY TRADING

[SyndicateTwo]

So what the heck is going on with the market?

(there are multiple charts in this post)

As you all know, I've been pounding the table about a monster rally that I believe 'should' be coming anytime. My reasons for this have been documented as mainly fundamental with I think I've shown the technicals backing me up. I believe we are only in a correction phase and appear to be trying to find a bottom. Before I post charts, you first have to understand why it's very dangerous to short stocks..

The population is constantly growing all the time. As that happens, the federal reserve is constantly increasing money supply to allow for all the new people coming into the market place to have money to support themselves. The more money that's out there, the more it trys to find a home to make more money. With 3 asset classes out there pretty much the only places for money to make money with no work, (unearned income), that money usually follows what the masses seem to do.

So, what have the masses been doing lately? I think we all know that it's been pretty much Real Estate. Now, we all know that Real Estate is finding its top. But for the last 3 years or so, and especially for the last year, the money that's been trying to make money has been in commodities. I can't go 5 minutes without hearing an add for Gold. Everyone wants to sell me Gold. With Gold going up, the theory has been that paper assets such as stocks and dollars are a risky investment because they have no true basis for value like Gold theoretically does.

But, along those same lines, the case has been pushed that you should also be buying all kinds of oil commodity related companies because they make money off of a commodity (oil) that theoretically has no upside limit because of world demand and because the places Oil comes from are places that are very unstable. Since the world lives and breathes the stuff, the cost for it should escalate dramatically. And especially since it's theoretically in limited supply and most likely decreasing while the world's demand is increasing.

Everything I just said was exactly what was said in the late 1970's.

Yet, we never ran out and have absolutely no sign of ever running out. But the market knows all. And I think the charts below tell the tale....




You can clearly see that money is BAILING out of all commoditiy stocks. Why is that?

The truth is you can fool some people some of the time, but not everyone all of the time. So many people have portfolios (professional money managers have been pushing this stuff for the last 2 years) that are over weighted in these stocks that the selling you're seeing is only going to get uglier as no one wants to be the last one out the door.

But they need a place to be. And real estate aint it.

The problem here though is that a large part of the S&P is correlated to these stocks and as they get killed, so does the index. And that then leads to more selling overall in everything. The Nasdaq usually gets hit the hardest because as the overall market shows major weakness (based again on the selling in energy related stocks) the technicals seem to break down everywhere.

But it's all an illusion.

Look here at a long term view of the QQQQs. That uptrend line we are about to come to at around $40 or so. Maybe a tad lower around the mid $39s. Until we break that convincingly, the market is going to head higher and this pullback should be a buying opp as that energy money gets put to work in the tech stocks.







Now, to my last QQQQ chart. This is where we are now in real time and I think should be the end of it around sometime this month. Since we have quadruple witching next Friday, it could get interesting. We also have a Fed meeting this month that could tell us if we are near the end of rate hikes. If so, then I think the market is gone. At 4.5% on fed funds, 4.75% would be a nice area to stop and look around for awhile to see what's going to happen. The reason is that with the 10 year bonds breaking out to the upside, the Fed now doesn't have to 'force' it up like they've been trying to do. Slowing is showing up everywhere around us and they have to see it and know it. All they need to say is something in the statement that mentions anything about coming to an end and I think you'll see the beginnings of a major rally that could last into late summer.

But I could be dead wrong and we might be in the throws of a major correction too! But the fundamentals don't justify it. The technicals kinda are starting to show some signs, but they always do when the market pulls back.





AH! But wait! There's more!

This is the second year of the second term of the presidential cycle. Cycle theory might be voodoo to some, but it does have some basis is history. Not enough to make a compelling scientific case, but a case nonetheless.

Typically, the second year of a 1st term is a cycle major low. That was 2002 and we all know what happened then.

This is the second term second year. Don't confuse the two. The 1st three months are the typical low and then the market takes off. The charts look to be doing that. Where did I get this info? This comes from a money manager I listen to on the radio who's been to say the least extremely accurate.