Ripe For a Fall

Stocks just rallied to three month highs and many believe “it’s a new bull market," with strong consideration given to the new “S&P 500 is trading above it’s 200 day moving average."

All good and true, and America is saving much more (which will prolong the recession)

I see the 200-Day Moving Average as nothing more than a support or resistance line being broken.

Many floor traders utilize a 20th month exponential moving average and chart it in to the S&P 500. These chartists believe that when the S&P 500 is trading BELOW the 20 month exponential moving average (EMA) it’s a bear market.
Studied this way, even with this nice little rally we’ve all become euphoric about, it’s still a bear market, and the end may not have been completed.

This is commentary to share that all is NOT as it appears, and we may be ripe for a fall. We think this "fall" may be two tier, with a slighter consolidation first, and even higher moves, before deeper downside, but in the meantime....


Floyd, nice trade on the June445C. Got in at 5.00 and sold to 6.30. Learning from you I also began to "watch" a put, and I day traded the June430P from 6.50 to 7.50 for a buck a contract twice yesterday while the market just flat lined along. Level 3 service has been extraordinary for me. I'm 9 months into it and day trading positions you don't even show in the alert, all on the Dow projections, and learning to "love an option" as you teach.

Thanks for your patience. MKL, Alberta, Canada


Floyd, interesting day yesterday. Made a buck on the call, and just took a second buy on the put. I'm 11 for 13 winners. I'm amazed the market is staying up, aren't you?

John in LA

Yesterday's flat lining for many hours, with repeated run ups to 8827 (8867 our "Greed top projection") showed what chartists see as a "waning bias" and a topping. Study our Dow projections today carefully, as we've added what could be a "two time" consolidation. Calls may have more run, and there may be more upside. Just take prudent risk.