6.24.2009 - Market Commentary

The markets are up this morning - as we speak, the S&P is up almost 14 points and the DJIA is up almost 90.  What the hell?  Here's what I think is going on, and it's expected - and it does provide a great opportunity I believe.  Look at the pink line (Kijun) line on the S&P chart.  If you notice it's pretty flat recently at that 917 line.  Same thing for the Kijun line on the DJIA chart at the 8550 line.   When you get a very flat Kijun line or Kumo line, you will usually get a reversion back to that level as the market figures out which way it wants to go.  So to to see a gain today is really not surprising in the short term based on these Ichimoku charts.  

However, what you should really be seeing from these 2 charts is the convergence of the blue line and the pink line (Kijun rising towards the Tenkan lines.)  Obviously when that happens, its a pretty negative sign indicating falling prices.   I would guess that crossover happens in the next few sessions.  The current support level is the top of the Kumo cloud for each index - DJIA is 8300 and 891 on the S&P.  If we close below those levels, you could easily see a drop to the bottom of the Kumo cloud which would put the DJIA at 7530 and the S&P at just under 800.  

So what I've done this morning is purchased some more DOG - the short ETF for the Dow 30.  I think this is a great opportunity to take gains on any longs you have (non short ETF's) and add to any short positions or short ETF's.  This will probably be the last gasp for a while of rising markets.   

If you are interested in learning more about Ichimoku charting, there is a book available for the Amazon Kindle here - http://tinyurl.com/nykgp5