WELL NOW WHAT?????

We are free falling now in the stock market and I am surprised how little press this is getting. Even the smallest rallies are getting sold off hard with volume. We are in downtrends across the board and if you look at my yearly forecast you will see this is what I predicted would happen for the most part. We are in a deflationary environment folks, do not listen to all this hyper-inflation crap, it is poppycock. There may be a future time where that will be true, but we have awhile to delate first, possibly a frightening amount. Just take time to think about it, what things you consume are rising in price right now? Virtually everything I buy is declining in price.

My own personal strategy resulted in exiting all remaining stock shorts today. The short side of the stock market has obviously been very good to me this month.We are extremely oversold on a short term basis. I am now looking for short term long entries in individual stocks. The problem is that the wide majority of them are a mess and have completely broken down. I repeatedly warned that the PPT would not be able to stop heavy volume, and we are seeing that now.

If you look at the above oscillators you can see how they are far outracing the price on the downside. They are at levels equivalent to prices of several months back. This can actually be a buy signal in some situations as an exhaustion type of indication. I do believe that is the case here. To be clear, I think any rally is a sell, but we will soon get a sharp upmove to work off some of this oversold condition. As a short term trader I would like to take advantage of that. We are still in a weekly uptrend even though this daily chart is not indicating that. As a result, it is still prudent to look for long entries on this decline. The problem is oversold can always get more oversold. This whole market had a huge air pocket as I stated. When you have air pockets this is what happens on the corrections, they are sharp and fast.

We will have to see if the commercials are buying this dip when the COT report comes out tomorrow. If they are not, look out below. If they are, this could be presenting a very good "short term" buying opportunity. I hope you are all watching the US Dollar. How many people outside of me were calling for this rally? How many people came out and said the COT data on the DX was misleading because of the light volume?

These type of things are just learned over time and through the school of hard knocks. I wish I could have just read a few books and learned more quickly how to work with the COT data. It is an art not a science unfortunately. However, if you have read here long enough you have seen how helpful it can be.

That's all for tonight