Market Commentary as of Friday, June 12, 2009

Fari Hamzei

As you can see in the charts below, starting with the left hand side, the rising S&P-500 Cash Index has been accompanied with lower and lower directional momentum, and thus creating a "bearish divergence" with the SPX.

In the right hand side chart, we show two proprietary modified Breadth (Advance Decline) data subgraphs. The longer term sub-graph (SP1) shows a modified cum A/D line superimposed with its sigma channels. The lower subgraph, MoMo, is a short-term A/D Oscillator. Notice the long-term vs short-term are also in a very pronounced "bearish divergence" pattern.

THIS TECHNICAL ANOMALY WILL NOT LAST FOREVER. It will resolve itself sooner than later. What is currently unknown is that the proper catalyst for the upcoming reversal.

If you are LONG, watch your trades very closely. If you plan to STAY LONG, start looking for some portfolio insurance (O-T-M Index /ETF Puts).

Market Timing Commentary as of Friday, June 5th, 2009

Fari Hamzei

A mixed picture at best, is one way to describe the latest US Equity Market charts and internals line-up.

And I am standing by my May 22nd short bias on SPX for Timer Digest's "Timer of the Year Competition." That being an intermediate term signal, my charts and indicators tell me to give this short a bit more time to work itself out. Here are some reasons why:

1. SP-500 Advance Decline Line Diverging (in an "M" pattern) from the Cash Index itself is trading higher (Chart 1, 2nd subgraph).
2. Volatility Indices receding again (setting up for a "W" before spiking higher - Chart 2).
3. Signs of Bond Vigilantes coming back -- TBT price action and options activity.