Where are we now?

In my post from July 27th, I made the bearish case. 

What is the price action telling us now?  According to Advanced GET, I find the probabilities tilting to an upside rally.   Keep in mind, the most intense short term rallies can happen within the context of a bear market.  We are still in a major downtrend.  I see no change there.

However, we have set up a counter trend trade on the indices.  Below is a chart of the Dow Jones ($INDU).  The rally potential on the DOW is up to 12,000. 

With this in mind, I am running a more balanced book now.  I still have selective short exposure.  I've recently addded selective long exposure in the energy sector.

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Joel Stahl

Comments

[anthony]

Dont you think with the fear index getting close to 50 it might be time to step aside & sit on the sidelines till Congress get there act togather ? Even being in a short position is risky right now as US govt could decide just like the Aussies to ban short selling altogather. In a way this has prevented our exchange (ASX) from falling too hard.

[Patch]

Trade what you see, not what you believe/guess/interpret to be true.
Trust the system, obey your rules. Manage the money.

K.I.S.S.

Trading is inherently risky, but so is running across a busy intersection.

[anthony]

Hi Patch,
I dont think I am alone when I say "is it time to stand aside" as traditional tech analysis is not working. There is a very good article in Barrons by Michael Kahn "When Market Analysis Capitulates" which you may care to read. On the day I posted my comment the author of this post was thinking of going long which would have been a real disaster as we had divergence on the Get Osc. Its all very easy in hindsight.