Educational use only. Never intended as advice.

There are a few things you don't ever want to hear in life - "the 60 Minutes Team is at the door,"..."pancreas"...and "Depends", as in the adult diapers. There's just nothing funny about incontinence. The news from Toll (the company that warns off short sellers) about disappointing business prospects threw a wrinkle into the bull party today, but a modest one.


The SP500 (SPX) continues its movement back toward the upper channel line on the weekly chart. Wall Street and children have a lot in common. They're egocentric and love candy. Candy to Wall Street is the magical end of the year bonus, which shouldn't be that great for mediocre performance, right? Who are you kidding?

Richard Russell opines today that you have to plan on rising rates and at least some competition for equities from bonds, especially on the short end, and the potential for broader appetite for the ancient and traditional wealth store gold (disclosure, net long gold via a variety of gold shares).

Here's the Amex Gold Bugs Index (HUI), with the arrow on the weekly "Bow Tie" crossover. I've drawn in an 'imaginary' pennant that could represent the HUI consolidation. Considering the strength of the dollar, gold has held up well.

Dynamics:
TRIN5 0.94
VXO 12.45, with ten day average 13.38 (no signal)
Stochastics oversold: SPX 6%
Stocks over 10 day average: SPX 66%
Miller's active stocks below 200 day average: 781, (10 days ago) 903

High volume ETFs that are significantly oversold:
EEM 81.88-80.85

ETFs NR7 (possible volatility expansion) doesn't predict direction:
14 of 28 of the highest volume (> 1 Million shares/day) have volatility contraction

IJR 57.12-56.66
IWM 65.57-65.06
MDY 130.44-129.43
EEM 81.88-80.85
EFA 57.25-56.92
DIA 105.74-105.30
SPY 122.42-121.79
GLD 46.10-45.82
IBB 76.47-75.94

With the concentration of high volume ETFs in an 'expansion' setup, I'd look to monitor the breakout, and not necessarily the first cross. Typically, if there is an initial move (such as a gap), the market will come back in, and often resume the initial direction later in the session.

Summary: price has expanded on oceans of global liquidity. Will the 'wealth' of home prices and Gutenberg's wonder at work be overcome by waning home prices and liquidity? Depends.

Good trading and great risk management to all.