T

Date: 03/13/2010 Time Issued (Saturday Evening 9:30 pm)

T-Waves Current OUT-Look for the various Indexes/Sectors
Index	Near-Term	Intermediate Term	Longer-Term
DOW	Neutral/Bearish	Bearish	Bearish
SPX	Neutral/Bearish	Bearish	Bearish
Nasdog	Neutral/Bearish	Bearish	Bearish
Russell-2000	Neutral/Bearish	Bearish	Bearish

Please Remember to set your clocks ahead this evening!

Remember never forget the power of greed and fear, and the propensity for investors wanting to own stocks (taking long-side) and fund managers chasing performance as we saw today especially if they think the bull-train is pulling away they will want to hop on board. Please, remember when in doubt as to market conditions/direction CASH is always king (or queen depending on your gender J ) please trade cautiously and be quick to protect your profits. I’m guessing that this the days ahead we will become embroiled in a major bull-bear battle as we head into the end of earnings-season and the start of the confessional period.

Strap-yourselves, as it is sure to be another wild another wild rollercoaster ride!! especially during as this week is the heart of earnings reports! The question is do you want a ticket to embark on this amusement ride...I expect volatility will be quite high and we will have many bouts of pops and drops...and a trader or investor that is not nimble or willing to correct with the market-flows and ebbs could lose a few fingers or become a proverbial bag-holder! Currently the trend is down, and the selling has been on significant volume...but that could quickly change as the dip buyers may emerge with the onset of a short-squeeze, or the bad-news bears could taste blood and grind the bulls into chuck....so until key levels are breeched to one side ort he other I'm recommending to my passive folks to remain on hold (sit on your hands...(see technical section below)....remember these quant-programs are great at developing head-fakes!

We need to take the best course of action we can despite the irrationality currently in the markets as such we will trade only what the market give us and we will be very patient, and wait for developing trends and opportunities to make money!

From a price perspective alone all the major averages are breaking out to new relative highs (for reference we are breaking out above the recent January relative) with the exception of the Dow and the NYSE. The major indexes have relentlessly continued their two-week crawl up the wall of worry rally; despite the contagions (one being the weak volume, the very tight trading ranges which move in leaps and bounds.

After last week's lackluster schedule the economic calendar for this coming weeks is robust (see schedule below) as we have several major economic releases; PPI and CPI, are out on Wednesday and Thursday. The biggest event of the week of course will be the FOMC meeting on Tuesday.

The bulls say this is a mega new bull market and the relative weight on the market is the upcoming FOMC meeting this Tuesday. The tone of this contrived FOMC meeting and subsequent bias statement could be market moving….though we should already have a feel for the tone as we have seen a horde of Fed heads commenting (using the pulpit) within their individual speaking engagements, the tone has started to change from my perspective and it appears the Fed-heads have been growing more hawkish (not market friendly). From the sound bite their official policy line still remains “we will keep rates low for an extended period of time” but I believe this bias statement could be the proverbial venomous snake in the woodpile. Nobody is expecting interest rate to change but they may start changing the statement in order to pre-signal to market participants a rate hike is coming sooner than later. Just changing the bias statement does not mean a rate is going to happen very-soon it just means the Fed is preparing the masses for the changing of their bias from extremely loose and overly accommodating to a more neutral stance; as they historically (under Greenspam and Bernanke) have to move from an accommodative bias to neutral before they change to a tightening bias.

The Retail Sales report for February which was released on Friday was a surprise for me as sales increased 0.3% in February despite the snowstorms. If you exclude autos those sales rose 0.8%; while core sales excluding autos and gas stations rose 0.9%. Obviously auto sales and gasoline sales were severely impacted by the storms. In contrast to the surprise increase in sales (consumers are needed with positive sentiment to continue sales growth, especially after tax-rebate checks are spent). We saw initial consumer sentiment report for March showed a decline to 72.5% from 73.6%; this markets the second consecutive decline but the drops are somewhat minimal unlike the massive declines in consumer confidence; as both the internal components declined.

This past week we saw the uncovering of several new revelations that Lehman used a complicated form of off balance sheet accounting involving phony asset sales to artificially boost its balance sheet whish is not a new process as apparently most banks have been using this same process and practice. In a simplistic state Lehman would transfer high quality assets to its London unit; then at the end of the quarter Lehman would sell the assets for cash to a third party with an agreement to buy them back the following week a basic shell game; as then Lehman used the cash to pay down debt making its quarterly earnings statement appear significantly stronger than it was as once the quarter came to an end they would borrow new money again and buy back the very crappy assets. Lehman reportedly started this process just to meet earnings that would fall short as they all wanted their bonuses but their greed took on its own life…now the question remains how many other to big to fail banks have been cooking the books like Lehman, as where we have one cockroach there are normally many others. With the spotlight on this sneaky Lehman process it is going to produce a lot of questions this ensuing earnings when financial firms report their upcoming earning. Where there is one cockroach there are normally others.

There is rumored to be a rescue package for Greece that will be announced before the markets open on Monday. The Guardian, a U.K. paper citing anonymous sources, said it would be for about $25 billion euros and will require rewriting some of the EU rules to force Greece to become more fiscally disciplined; they reported that it’s likely to come from various European nations in the form of debt guarantees. Greece is expected to need another $55 billion euros by year-end…this development is likely already factored into the markets! Also the news I’m reading is that talks are being held on creating a European Monetary Fund (EMF), which would act like the IMF and loan money to EU nations with very strong conditions attached to the loans, this action is likely as a result of other looming debt defaults by the PIGS.

TrimTabs this week appears to have capitulated as they turned bullish stating that the U.S. economy is performing better than expected, helped by historic low interest rates and government stimulus; TrimTabs, which tracks real-time economic data, has been mostly bearish in recent years as the financial crisis sparked a surge in unemployment and a drop in income in the U.S.

As the economy showed early signs of stabilization last year, the firm remained cautious. However, on this past week the firm said it's seeing more reasons for optimism. “This rebound seems to be the real deal,” Charles Biderman, chief executive of TrimTabs, said in a statement. “The key indicators we track suggest the economy will keep expanding over the near term.”

Wages and salaries are up 3% year-over-year based on income and employment tax deposits to the U.S. Treasury from all salaried U.S. workers. Meanwhile, online job postings, one of the most sensitive employment indicators, are up 9% year-over-year and 18% year-to-date Biderman stated. “The economy is performing much better than we realized just a few weeks ago,” said Biderman.

Most of the economic rebound has been fueled by low interest rates and government stimulus, he noted (so I’m perplexed at his reversal in sentiment). While TrimTabs estimates that the economy lost 30,000 jobs in February, the firm expects employment to expand in March as the government hires more temporary workers to complete the census undertaking.

Right now, investors starved for yield (thanks to the antics of the Fed are eager to lend money even at these ridiculously low rates as they seek yield. And I believe it’s only a matter of time (not if) when investors demand higher rates in response to pro forma economic growth and/or deteriorating sovereign creditworthiness, and if I’m right the consequences could get quite ugly real fast!

I was also surprised at the lack of volume the week before option expiration was pretty anemic. Normally the week before an expiration picks up significantly (especially after we have seen an historic number of options/futures contracts cross these past 6-7-weeks. This is also a quad witching expiration so it should have been even busier, so where the heck is the volume; the lack of volume is thought to be from the lack of sellers; I believe its from the lack of real buyers….despite the performance buying by fund managers and the race to lock in first quarter performance, it appears real buyers and smart-money sellers have elected to remain sidelined out until after the FOMC meeting or maybe even into the end of the.

There seems to be a convergence of bullish factors for many fund and hedge fund managers; quad-witching, the looming end of the quarter window dressing blitz and the potential for a bullish sentiment spike into the next jobs-number release and into the start of the first quarter earnings season. The Dow and the NYSE Composite are the only major indexes that have not broken out to new highs. However, the Dow is starting to show some relative renewed strength and its now only 125+/- points from a new relative high. I’m guessing after the recent parabolic rally that the small-caps and mid-caps have enjoyed many fund managers who may be concerned about how over extended this index is may want to start taking profits and putting their gains into the very liquid large caps for safety, as such these money inflows could drive the Dow up into making new relative highs.

Competition in the health insurance industry is vanishing, according to an American Medical Association in their recent report that looked at data from 43 states and 313 metropolitan markets. In 24 of the states, the two largest insurers had a combined market share of 70-72% in some cases even more. The report, titled Competition in Health Insurance: A Comprehensive Study of U.S. Markets, was released this week.

Among the other findings:

In 54% of metropolitan markets, at least one insurer had a market share of 50% or more up from 40% of metropolitan markets the year before.
In 92% of metropolitan markets, at least one insurer had a share of 335 or more up from 79% of metropolitan markets the year before.
A whopping 99% of metropolitan markets are highly concentrated, according to federal merger guidelines, compared with 91% the year before.

"The near total collapse of competitive and dynamic health insurance markets has not helped patients," AMA President Dr. J. James Rohack said in a new release. "As demonstrated by proposed rate hikes in California and other states, health insurers have not shown greater efficiency and lower health care costs. Instead, patient premiums, deductibles and co-payments have soared without an increase in benefits in these increasingly consolidated markets."

Rohack added that a lack of competition in the health insurance industry "is clearly not in the best economic interest of patients," and the AMA wants the U.S. Department of Justice and state agencies "to more aggressively enforce antitrust laws that prohibit harmful mergers." The AMA also wants the Department of Justice to consider the following measures: a retrospective study of health insurance mergers; research to identify the causes and consequences of health insurance market power; and creation of a system for predicting the effects that health insurance company mergers will have on patients and health care providers.

Technically Speaking

Weekend Weekly Analysis 03/15/2010

We are entering options-X week, where we historically see some increased volatility and with the near-term charts quite over-bought and the daily-charts turning up (or is it a head-fake) the daily's on the major indexes have crossed above their respective downtrend line so this relief rally is the bulls to lose! As I stated on Friday in our real-time trading room…this market is on crack, speed and valium all at the same time!

Surprise, surprise, surprise, the indexes don’t want to go down….they are made of steel, they are faster than a speeding bullet, more powerful than a locomotive, and able to leap tall buildings in a single bound…they have all the qualities of a Superman type character….I’m now wondering what will be the markets version of green Kryptonite the radiation that nullifies Superman's powers and immobilizes him with pain and nausea; and that prolonged exposure will eventually kill.

If you’ve been following my writings in various forums you know it’s a mild surprise to me than again I had to acknowledge the massive amount of liquidity that has been injected into the economy and the ramifications of such, as the banks are not lending instead they are trading and investing the monies, businesses are not expanding, or hiring they to are investing it…a strange divergence.

We saw this week that the number of “problem” banks in the good old USA rose to the highest level in 17 years, signaling failures will no doubt accelerate in 2010, according to the FDIC. The FDIC included 702 banks with over $402.8 billion in assets on the confidential list as of Dec. 31, a 27% increase from 552 banks with $345.9 billion in assets at the end of the third quarter in their report released this past week. “Problem” banks account for 8.7% - 9.0% of all U.S. lenders. The FDIC is also basically broke and is seeking authority to tap a $500 billion credit line with the Treasury Department; hardly a bullish scenerio; as they already required banks to pre-pay 3-years of fees, factored in over a year or so!

Banks showed “incremental” improvement in the fourth quarter, Ms Bair stated, as overall profit came in at $914 million, compared with a whopping $38 billion loss in the year-earlier period. Net charge-offs slowed for a third consecutive quarter, she said. “It’s not that this was a strong quarter,” she said. “It’s simply that everything was so bad last year.” It was very interesting to see that provisions for loan losses fell 14% to $61.1 billion in the fourth quarter from the year-earlier quarter, according to the report!

At the same time bank lending had the largest contraction in more than six decades…. . Loans fell 7.5% in 2009, the largest annual decline since 1942, Bair said. I read in a 10-k this past week that SunTrust Bank, the seventh-biggest U.S. bank by deposits, reported commercial lending in 2009 declined 21%, or about $8.5 billion, from the previous year hardly bullish for thoise needing loans.

Full-year 2009 net income was $12.5 billion, up from $4.5 billion in 2008, but well below the $100 billion in net income the industry reported for 2007 (we have a long ways to go). Increased non-interest income, higher net interest income, and lower realized losses on securities and other assets outstripped increased non-interest expenses and higher loan loss provisions to produce the increase in earnings. Non-interest income was $52.8 billion (25.4%) higher than in 2008, with trading revenue registering a stellar $26.6 billion improvement. Net interest income was $38.1billion (10.6%) higher. Realized losses on securities and other assets fell from $15.4 billion in 2008 to $1.4 billion in 2009; as the banks still refused to deal with these toxic assets!.

I had thought/expected the indexes would make the intermediate level high in January as I hade pointed out they would, however I expected a significantly deeper retracement than we experienced on the way down. Since the 02-05-2010 reactionary lows the markets have behaved as if they are on steroids, far more bullish by a long shot than I expected (one might call this rally utterly amazing) as we’ve had several real reasons technically to think the market was topping, but each sell-signal was mysteriously erased or evaporated right before my eyes as when the markets generated sell-signals and looked like they were rolling over the very next morning it was almost as if nothing happened.

It is very important to note that market crashes are almost always major surprises for the masses as usually for a market crash to materialize, we would need to see the financials start to roll over then the high beta-players (especially the small/mid-cap speculative players) those highly overbought and often one directional plays due to the inability to short-them to start to rollover along with the safe haven-players. So far in this anemic volume environment (this past week was the lightest week for volume in the past 14-years if we exclude holiday weeks like Thanksgiving and Christmas).

Strangely the financials especially the banks have turned up and have been rallying and they have taken over the leadership as they are doing far better than semiconductors and chip stocks which have always been the leadership group…the semi-players have now started to rally as well or at least gap-run and then distribute. So if financials are moving up and semi/chippers are starting to as well there is not a sectors displaying weakness regarding price. So the indexes have continued to crawl higher on anemic volume.

Seeing the iShares Russell 2000 (IWM) bounce over 16.7% in about 5 weeks off its low of $58.00 back on February 5th to Friday’s close of $67.72 is astonishing, I just wish I caught this monster move. The strength here is unrelenting, if not frustrating and the run is more than a bit frothy. And as much as I'd like to see a short-side entry point, there just haven't been any cracks in the technical picture (the price action keeps increasing and the indexes crawl higher despite the market contagions I am watching for several strong signals for a reversal, but for now, there is no superman busting kryptonite in sight.

Markets will top very soon, but they may extend further than logic and the technicals dictate

Generally we'll see the most aggressive moves at the beginning and the end of a bull market (either a real bull-market or a bull-market in a secular bear). Simply put at the beginning of the move smart money (those with insider info) pile into perceived value. At this stage of the game retail investors and traders are still too shell-shocked from the bear (locked into an extreme FEAR-Mode) to trust the rally and the traders keep attempting to short-into-strength to no avail. Finally, toward the end of the bull-market (in this case a bear-market relief rally), retail investors will often panic that they have missed the bull-train heading into the land of milk and honey) especially in this instance as the Fed has keep rates so low for so long those on fixed incomes or about to retire need to seek yield to supplement their incomes and they are forced to chase this yield in the markets….so in either manner the retail-player’s FEAR of missing our trounces their FEAR of losing and they pile into bull train sending the market surging higher. This is of course when the smart money (especially the leeches on Wall-Street that has induced the herd back into the markets with upgrades and dreams of significant risk-free returns) is unloading their shares.

If you look back at the charts you can see that the 2002 to 2007 cyclical bull market following the technology-bubble-bursting followed this scenario very closely as the sharpest rallies occurred from early March 2003 for 12+/- months into to early 2004 and then again we saw a dominate rally as the market surged out of the 2006 bottom into the final exhaustion top in formed in October of 2007….its worth noting that I almost caught each bottom and top exactly but I far underestimated the depth and breath of the initial rallies….as I did again this time as we caught the March lows 3-days in advance…but the duration and depth of the move again trumped my wildest expectations….I am working on defining my models.

That brings me to where we are currently in this cycle….as this cyclical bull we're in right now is about to morph into a completely different market animal than we have ever seen before in my opinion as this huge bull market is the birth-child to an historic event unlike any other bull market in history. And from my though parameters and synopsis and conjecture this bullish-trend won't fit into any of the old models or categories of the past. I believe that we're about to bypass the normal second phase of a typical bullish market (the corrective phase, and consolidation phase) and jump straight to phase three, the blow-off top and exhaustion stage of a bull markets where the lemmings and bagholders are again left at the proverbial alter, where their wealth is destroyed!

This is a bull spawned by the most notorious villains of old the lecherous banks and the Federal reserve as its almost entirely the result of the keeping the money printing presses working 24/7 where in we have seen literally trillions and trillions of dollars created by central banks around the globe, and that these over stimulative dollars, yen, yuan, euros and other bloated (bubble of liquidity) have been propping up the global markets; and collective these bull markets have been much more aggressive in their development than those in the past rallying over 60-85% in many instances in their first 10-12 months. And as such these parabolic rallies are close (weeks/months away from developing blow-off tops….we are not these yet….but we are closing in…remember catching tops is far more difficult than catching bottoms!!) The recent move to new highs by the Russell-2000, the Mid Caps, and Nasdog which have yet to be confirmed by the SOX or real valuations suggest that the third and most often the dangerous leg of the bull market is underway (5+ weeks old now) and most intermediate-term rallies last 7-12 weeks trough to trough so we could we probably have at least 2 to 7 weeks left depending on breath and depth of the moves before we can expect a real solid top to be established especially in this highly-induced liquidity environment.

We need to keep in mind that these recent weeks we have rallied upward while our precious greenback has been rising a very strange positive divergence. The greenback trend could be the primary catalyst for the next leg higher so next, let’s take a look the dollar charts below as they appear poised for a near-term retracement. There’s no doubt the rally in the greenback over the past 4+ months has been quite parabolic as most violent rallies occur during falling wedge break outs and in bear markets! However, as you can see from the chart below, so far the dollar hasn't been able to move above the peak of the last intermediate cycle *81.65+/-). So if the dollar fails to break the June 2009 highs and continues to roll over, it is in jeopardy of succumbing to the secular bear market trend again if the $78.50 level fails to hold. Sentiment has now turned to extreme bullishness for the dollar (due to geopolitical events) and extreme bearishness on the Euro; this often foretells a situation where we run out of buyers of dollars and a prescription for a violent short covering relief rally in the Euro [those wishing long exposure in the Euro could use the FXE, EU, ERO, or the double-longs in the ULE, URR….short side exposure can be found with the DRR and EUO] a pull back in the dollar could be bullish for commodities and their related stocks helping to press the indexes higher!.

Now remember, the stock market has been rallying despite the strength in the green back which has been more than a bit puzzling for me; we have seen that crude has rallied as well over $81.00 despite a strong dollar. Copper is only a tad from all-time highs despite a strong dollar. Gold, the strongest commodity of all, is holding well above the prior bull market high of $1030 in defiance of a strong dollar….if the dollar starts to roll-over these markets/sectors could easily catch a bullish-tailwind.

From my vantage point with the massive inflows of liquidity all major asset classes are now wound up as tight and if the greenback begins the next leg down due to massive hyper-inflationary practices by the fed and Treasury and reckless spending by politicians these assets are set to move higher.

I think virtually everyone (myself included) totally underestimated the massive liquidity injections and how the trading desks of the majors banks could drive up asset prices, thus the influence that the multi-trillions of dollars the Fed has pumped into the system was very positive for asset-bubble-creation and it had a very positive impact on the global markets, for the near-term….and the subsequent bubble is monstrous in my opinion, and the subsequent bursting of this bubble will make the technology and housing bubble look small…so on a near-term basis they look like market superheroes….but when the piper needs to be paid they will ultimately look like huge super-scoundrels, as this course of action in my opinion will result in Financial Armageddon!

First, I’m afraid that not only will the stock market move higher into extreme irrational levels of valuation but so will the commodity markets in this massive inflationary explosion; and a contributor to the 2007-crash was $100-$147 oil and $4.00 or more gasoline, soaring heating and food costs around the globe that eventually broke the back of the global economy (besides the debt/credit debacle) which was also a major contagion not to forget the real estate bubble which has yet to deflate, before we start to repair it.

I’m very concerned that the average investor (bagholder) is going to fall for the hype that the Fed is a miracle worker and has “fixed” all of our financial problems, especially if the SPX appears to be breaking out and trades north of 1240+/- as at first blush it’s going to appear that the coast is clear, but that massive force-5-hurricane that will hit the global markets has only been delayed by these massive monetary infusions in my opinion, and by delaying the storm that should have been more than ½ over by now they have allowed it to pick up in intensity.

So when the markets top and start their death-roll over into the next bear phase virtually no one will recognize what’s happening and why as they will be in complete denial and everyone will again get sucked down into the depths of the pending cesspool which will make the last leg down appear very minor as this next bear-market down leg will be far worse than the last one and could last for several years. This bear market leg won’t only be caused by problems in the credit/debt markets; but this huge grizzly bear will be morphed into a massive bear driven by structural problems in the currency markets and soaring inflation which will be denied for a long period until even the best math manipulators throw in the towel. Unfortunately the idiots that have created this bubble (fed, treasuries and other central bankers) aren’t going to fix a major currency crisis by printing more money; as it will be these very actions that will be the central cause of the crisis in the first place.

That leads me to my golden investment play as the only asset class that is going to offer any protection in this inflationary environment is commodities, especially gold, silver and other precious metals. Not only will gold and silver outperform in what will be a hyper inflationary surge, but they will protect investors during the inevitable crisis that the Fed’s insane monetary policy is going to unleash in the not to distant future 8-12 months away in my opinion.

Now before you go out and buy gold and silver tomorrow let me tell you, I believe that gold/silver are going to experience corrections in the weeks/months ahead, and that by June –July the correction should have run its course and we can look toward junior-miners (who will command premium take out value) and spot metals as great places to be invested (many of the gold stocks as well as the GLD have leaps and they also would be great longer term investment vehicles)

On a technical basis we are entering the danger-zone; perhaps most importantly as I have previously mentioned and written about the Monthly charts in my technical section below which are depicting that the MACD oscillator, a very telling indicator along with the full stochastics is close to topping out (we haven't seen a rollover yet could be several weeks away) as we trend into OHR and very-overbought conditions historically and if the Indexes do not rebound strongly this week and into the next month we could see a very-strong sell-signal trigger which could be the start of a water-shed selling event….we must be on the alert for a manipulated monster short squeeze even as the newbie shorts start to venture into these overstretched markets....the prop and programs traders are renowned for staging such events when the street believes that critical OHR levels are broken and the only path is up!

I'm still bearish right on on a longer term basis (but on a near-term basis I'm NEUTRAL to bullish until key support levels are breeched as I hate to say it but the prop-trades and market chasers of performance are making me believe that we could see an options X rally and it could last into the end of the quarter (but I believe that likelihood is slim) Despite the near-term charts as well as the daily/monthly being very overbought an artificial rally-exhaustion topping event is not out of the question.

After months and months of this artificial rally, where 80% of the gains in the indexes have come on 39 Mondays, where we see blatant upward manipulation of the indexes through gaps induced by futures players we are getting extremely close now in my humble opinion for a major reversal that will correct 35-50% at a minimum of this bear-market bullish-rally. I believe wholeheartedly that we are on or very near pinnacle of a major top in the various indexes that could be the top for many years to come and from my vantage point the major key element to be concerned about now at this juncture is not to attempt to pick the so called proverbial exact top, but to protect our capital….as to pick tops this can be a foolish endeavor (started picking what I thought were tops in the Nasdog late in November 1999 only to be bloodied in doing so through March of 2000....and this time the levels of market manipulation and intervention as at historic highs so this irrational-bullish behavior could exceed logical assumptions greatly as the Fed and treasury and their bastard-sons what i call the major-lecherous banks/bankers who along with the Fed were primary-responsible parties to the major economic implosion of the housing-sector and debt-markets which have still yet to be resolved as still stepping hard on the printing presses!.

This week the Dow was the big winner on Friday as it posted a gain of 12.85 points but it was the big-laggard on the week only gaining 58.49-points or 0.55% to close out the week at 10,624.69 (just 100+/- points from the January highs)! The index had been on a parabolic romp since (February 05 bottom at 9835 as it has regained 790+/- points) and the March 6th 2009 lows (6,449) it has producing a stellar rally of 4,281+/- or 66% in just 12+/- months as we peaked late in January at 10,767 (140-points from here) a very remarkable parabolic bear-market relief rally.

If we see subsequent buying by the bulls on Monday look for a retest of the January highs as there is little real OHR till we reach the 10,750-10765 depending on the magnitude of the rally and potential of a short-squeeze....thereafter we have major OHR coming into play at 11,150+/- if the rally takes on a life of its own during options-X week......conversely if the bad-news-bears return we could drop to retest the 10,400-10,425 level thereafter support comes into play at 10,275-10,300 level where dip-buyers could emerge....if this level fails there is little real support till we reach the 10,200+/- (its worth noting that the Dow near-term charts 240/180/120/60 are quite overbought as is the daily and Monthly charts).

The DOW-Transports....posted a positive close on Friday thanks to the giddiness and euphoria in the airlines and it has been on a bullish-run-of-late gaining 129.51-points on the week or 3.09% a great-return fort he week! these gains were even more impressive when you see that the transports have rallied with crude....the near-term charts as is the daily is very-overbought and a correction could be close at hand....the monthly chart is very over-extended as well and we have risen right up to massive OHR at 4350-4370+/-!! So extreme caution is dictated as I stated last week I was waiting for a test of these areas to take Short-plays on the various components....If the bulls somehow managed to muster some buying interest and return in a buying mood on Monday look for them to attempt to retake OHR 4,350+/- thereafter we have a have brick wall of OHR 4,380+/-....if crude prices continue to move higher in response to a weaker dollar (a near-term-correction or reversal is possible)......if the bears return in a ravenous mood they will likely attempt to retest the the 4,285+/- level thereafter there is support till we reach 4,150+/- thereafter if the selling persists 3,790-3,810 of significant support! Please note the longer-term charts are forecasting a potential nasty very correction is likely ongoing with a likely target of 3450+/-

CRUDE

We saw a wild relief rally in crude this past week despite a relative stronger greenback, as geopolitical contagions bolstered prices….Crude prices had rallied from $69.50 back to $83.47 this past before falling back on Friday to $81.49 close out the secession on the continuous contract as China’s demand concerns and the increases in inventory levels (meaning excess-supplies) in the EIA and API reports were ignored as hot-money ramped up crude into options "X" the daily chart is toppy but the weekly chart is telling me that we could make a run for 90.75-91.50 before rolling over hard (a ten-point run up from here).

I AM STILL EXPECTING to see at least a 38.2-50.0% Retracement

Index	Relative High	March Low	Spread	Fib 23.6%	Fib 38.2%	Fib 50.0%	Fib 61.80%	Fib 76.40%
Dow	10,730.00	6,470.49	4,259.51	9,724.46	9,102.99	8,600.25	8,097.50	7,476.03
SPX-500	1,153.41	666.79	486.62	1,038.53	967.54	910.10	852.66	781.67
SPX-100	530.74	317.37	213.37	480.37	449.24	424.06	398.87	367.74
Nasdog	2,376.28	1,265.62	1,110.66	2,114.09	1,952.04	1,820.95	1,689.86	1,527.81
NDX-100	1,930.17	1,040.62	889.55	1,720.17	1,590.39	1,485.40	1,380.40	1,250.62
Russell-2000	678.90	345.01	333.89	600.08	551.36	511.96	472.55	423.83
Transports	4,331.37	2,134.31	2,197.06	3,812.71	3,492.16	3,232.84	2,973.52	2,652.97
SOX	370.91	188.21	182.70	327.78	301.12	279.56	258.00	231.34
SPY	115.97	67.10	48.87	104.43	97.30	91.54	85.77	78.64
DIA	107.23	64.78	42.45	97.21	91.02	86.01	80.99	74.80
SMH	28.72	15.64	13.08	25.63	23.72	22.18	20.64	18.73
OIH	132.39	64.65	67.74	116.40	106.52	98.52	90.52	80.64
XLE	60.56	37.40	23.16	55.09	51.71	48.98	46.25	42.87
AAPL	227.73	82.33	145.40	193.41	172.19	155.03	137.87	116.65
MSFT	31.50	14.87	16.63	27.57	25.15	23.19	21.22	18.80
GOOG	629.51	289.49	340.02	549.24	499.63	459.50	419.37	369.76
QCOM	49.80	32.67	17.13	45.76	43.26	41.24	39.21	36.71
CSCO	26.03	13.61	12.42	23.10	21.29	19.82	18.35	16.54
ORCL	25.64	13.80	11.84	22.84	21.12	19.72	18.32	16.60
GILD	50.00	40.62	9.38	47.79	46.42	45.31	44.20	42.83
INTC	21.55	12.07	9.48	19.31	17.93	16.81	15.69	14.31
TEVA	62.17	42.67	19.50	57.57	54.72	52.42	50.12	47.27
AMZN	145.91	59.82	86.09	125.59	113.03	102.87	92.70	80.14
The above 10-NDX horsemen make up 49.5% of the 100-stock NDX, (AAPL=15.6% alone) and they are important to monitor

As you can see from the colored blocks above, we have hit our first level fib-targets on several of these indexes/fliers

The SPX experiencing a correction from the recent giddy bull-run.... then on 02-05-2010 it again reversed back into its euphoric rally....on Friday after an initial gap-up and rally attempt it staged an inside/out day a technical mild-bearish reversal as it ended into negative zone "red" into the close but it was only a mere 0.25-points....nevertheless on the week it was a winner gaining 11.29 or 0.99% to close out the week at 1,149.99 ....right below the January 2010 relative highs...since bottoming on 02-05-2010 1,044.50 the index gained back 105.50+/- points or a whopping 10% in just a little over a month, a stellar performance!

I still believe am expecting what will ultimately be a bearish 38-50% retracement at a minimum....but right now the bulls are in complete control and price action has been very-bullish despite happening in a volume less environment! The near-term charts as is the daily and monthly are very overbought (see-below) but during option "X" they could remain that way; as the bulls almost always overshoot with irrational buying/behavior, as managers chase performance into the end of the quarter! My propriety trading systems has been flashing a multitude of negative volume and now price divergences that will likely play out for the bad-news-bears over the next several weeks maybe months and result in the selling event I have mentions taking us back to at least 1085 then 1015 levels of support..

If the bulls return on Monday and we make it through the weekend with out a blow-up in Greece or another European country....then the bulls could make a run at the 1155-1057 level of OHR thereafter we have OHR at 1168-1,170.....if the bad news bears return, they will likely have their sight on retesting the 1,125 - 1,135 level of support (the daily 21ema comes into play at 1,122+/-) thereafter we have little support till we reach the 1098-1002 level

The Nasdog posted some decent gains this pre-option "X" week as we saw some strong buying in the chips/semi's this week, but after the smoke cleared on Friday it was a slightly negative secession with the Nasdog gapping and then closing red for the day on light volume. Nevertheless the index was very bullish for the week gaining 41.31-points or 1.78% to close out the week at 2,367.66, this index has staged a remarkable relief rally off of the 2100 intraday day low level posted on 02-05-2010 and ever since that correction low its been on a parabolic rally with a plethora of mystery gaps....and subsequent distribution selling, only to lift into the closes and churn higher....in a little over a month from the recent lows the index has posted remarkable gains of 12.7% the biggest 25-trading day rally since the irrational days of 1999-2000 Its worth noting that the near-term charts the daily charts and now the monthly charts are very-very overbought....and we could see a selling event very soon to relieve this condition....the concern being, will it just be a correction or something bigger!

If the Nasdog bulls return in a buying mood on Monday they will attempt to retake the the following levels of OHR 2,293-2,401 thereafter the 2,425-2,429 level.....The charts are still displaying negative divergences, and the near-term charts as well as the daily are quite overbought, but as I previously stated in this irrational-environment we can remain overbought for extended periods of time just like we did in late 1999 into march of 2000....(remember late March periods are renowned for bearish reversals so please be careful taking on blinded-longs! We must stand ready for a potential LONG-squeeze reversal, as these relief selling events can be very quick and deadly for newbie longs....If the bears return on Monday in a ravenous mood they will likely attempt to de-horn the bulls and knock the stuffing out of them....as such the bears will look to take the index back down to 2,320-2,325 thereafter we have support at the 2,298-2,305+/-level.

Please note the Monthly Nasdog chart is very overbought and the NDX appears to be posting a double top, signals that bear-watching....The tech bubble lead to a secular bear market. Within that secular bear, we enjoyed a cyclical bull market from 2003 through 2007, followed by a fresh round of selling in 2008. This past week was the one year anniversary of the so-called bear market bottom and as we can see from the Nasdog monthly chart , we are approaching a test of the secular bear's trend-line. Until that trend-line is broken for good, we are still (despite all the liquidity being thrown around) in a cyclical bull market within a secular bear.

The Russell-2000 traded basically Flat on Friday (but it was up 10.57 points or 1.59% on the week.....the buyers emerged twice this past week, and Friday's move was very lackluster! As I wrote three weeks ago the index powered through the 200Dema....and now we could have seen confirmation of a new near-term multi-day bullish relief rally (which is exactly what we have seen transpire)!

Now I'm issuing a major warnings signal This index needs to be watched very closely as the negative divergences I have spoken about these past weeks have grown steadily *(price moving up on diminished volume, far to many gaps being sold into and lost [meaning that the opening gaps are lost into the close], and a diminished number of new-highs)!

This weeks rally has now driven the index up in a parabolic fashion (to historic proportions) as it regained and moved above 657 (the 61.8% Fibonacci of the overall down move from the July 2007 highs to the March 2009 lows) on several nice gaps and now it has run smack dab into a wall of massive OHR at 677.75-680.00 the monthly 50sma, the Monthly and daily charts are very-overbought and the catalysts for the recent moves have been gaps/and then distribution, not very bullish in my opinion)! Fund managers are just throwing money recklessly at small/mid caps as they chase performance to keep up with their peers with out considering valuations or fundamentals (I scanned over 400 of the top Russell-2000 charts this weekend and almost all the chart patterns are identical....{gaps are far to common, and their subsequent losses are too}.

A huge contrarian signal developed on Friday as we saw on the UWM (Russell-2000 pro shares) some very interesting call activity . A total of 12,770 calls and 273 puts were traded raising an extreme low Put/Call volume alert, as on Friday the the Put/Call ratio came in at 0.02 meaning that there were 46.78 calls traded for each put contract traded. *** The Put/Call ratio is often used to measure investor sentiment, the ratio serves as a predictor of future investor actions. A high Put/Call ratio suggests that the investor sentiment is bearish and that investors expect the underlying stock to decrease in value. In contrast, a low Put/Call ratio suggests that the investor sentiment is bullish and that the underlying stock is expected to increase in value. Remember the crowd is often 90% wrong!

This rally is clearly in the hands of performance chasers as irrational exuberance is growing. as this pro forma economic recovery (green-shoots) continues to manifest in an foggy environment! This liquidity infused manipulated (generated by the big banks through their prop-trading desks like GS, MS, BAC etc. who continue to get cheap monies from the federal Reserve at 0.20%-0.25% interest keep injecting it into various asset classes *(they are not using it to foster new-loans) and we see the global markets rise despite the fact that since the 2007 great financial meltdown nothing of substance has significantly changed! We need to maintain close scrutiny of this index for direction tonality as goes the the Russell-2000 and Nasdog so goes the market, and right now we are morphing in a relief rally of historic proportions.....this index is historically the speculative playground for the high beta-players and growth speculators that rush in with hot (free and easy Fed, money).

If the bulls in a buying mood after a long-weekend look for them to assault the 681-684 level of significant OHR a successful breech up through these levels and we could see a quick run to thereafter 698-700+/-....if the bad-news bears return in a nasty selling mood on Monday they could take this index down to 664-666 thereafter we have near-term solid support at 645+/-). Please note...the Russell-2000 like the Nasdog posted and mini-reversal on friday as it gapped up and traded below the gap, a bearish development

Dollar, our precious greenback

We have enjoyed the benefits from my bullish call on the greenback back that i made in late November as we took profits in our UUP-calls and we have tightened up our LONG-trade on the UUP....I suggested taking off 75% of the Dollar-long/Euro Short option plays as well, and to tighten up the protective stops this past week!

As I had previously forecasted The U.S. dollar has been embroiled in a very decent relief rally these past weeks/months as it has been enjoying a respite from its declining trend over the past several years, as evident on the dollar index charts below, it bounced from the 74.24 level as I had forecasted it would.

After forming a near perfect falling wedge pattern pattern, which is a TYPICAL reversal pattern...A primary reason why we undertook a contrarian long play at the $74.00-$74.50+/- level....just over 8+/-weeks ago I recommended buying that support at the climax of the weekly falling wedge-pattern. As I stated then we were ripe for a correction (I also recommended Shorting Gold and the metal-stocks especially (gold stocks, copper and other commodities); remember strength in the greenback depicts weakness in commodities, if demand holds steady

The Dollar index has breeched (moved above) the important $79.15 level **which is now near-term support** and looks destined to retest support $78.05....if the momentum bullish traders emerge we could see a run to 81.95-82.55....but the charts are telling me that there is a very strong probability of a significant correction is going to take place first before the next leg ..so we may see a pull-back to 78.05-78.25 before the next leg up develops, then we could see a resumption of this near-term relief rally...the weekly charts also support this premise!

On a near-term basis this would be bullish for GOLD, Energy (crude) and other commodity stocks like copper, stocks that would benefit from such a move are:

HES, OXY, OIH, SLB, USO in the energy sector (XOM, COP, CVX), other commodity stocks like GOLD, AEM, NEM, GFI, GG, GLD, SLV,   I also like the leveraged pro funds in this instance.....UCO-crude, UGL-Gold, AGQ-Silver,

The following instruments provide some extra-leverage when trading the various sectors As I believe we are about to reverse course and become embroiled in some very distinct selling you could also look at utilizing the SHORT 2x-leveraged Pro-Shares                                                         ProShares-Website

FXP     (attempts to replicate the {2x} of a SHORT the China-25 Index

RXD    (attempts to replicate the {2x} of a SHORT the Dow Health Care Index

QID     (attempts to replicate the {2x} of a SHORT the NASDAQ-100 Index

SDS     (attempts to replicate the {2x} of a SHORT the S&P 500 Index

MZZ   (attempts to replicate the {2x} of a SHORT the S&P Mid-Cap 400 Index

DXD    (attempts to replicate the {2x} of a SHORT the Dow Jones Industrial Average

TWM (attempts to replicate the {2x} of a SHORT the Russell-2000

SKK    (attempts to replicate the {2x} of a SHORT the Russell-2000 Growth

SSG     (attempts to replicate the {2x} of a SHORT the Semiconductors

REW   (attempts to replicate the {2x} of a SHORT the Ultra technology

SKF     (attempts to replicate the {2x} of a SHORT the Ultra Financial

Emerging Markets BEAR 3x EDZ, Financial BEAR 3x FAZ, Energy BEAR 3x ERY, Developed Markets BEAR 3x DPK, Technology BEAR 3x TYP, Large Cap BEAR 3x BGZ, Small Cap BEAR 3x TZA, Mid Cap BEAR 3x MWN    Direxion link
For reference only LONG-2x-leveraged Pro-Shares

QLD    (attempts to replicate the {2x} of a Long the NASDAQ-100 Index

SSO     (attempts to replicate the {2x} of a Long the S&P 500 Index

MVV   (attempts to replicate the {2x} of a Long the S&P Mid-Cap 400 Index

DDM   (attempts to replicate the {2x} of a Long the Dow Jones Industrial Average

UWM (attempts to replicate the {2x} of a Long the Russell-2000

UKK    (attempts to replicate the {2x} of a Long the Russell-2000 Growth

USD     (attempts to replicate the {2x} of a Long the Semiconductors

ROM   (attempts to replicate the {2x} of a Long the Ultra technology

UYG     (attempts to replicate the {2x} of a Long the Ultra Financial

Emerging Markets Bull 3x EDC, Financial Bull 3x FAS, Energy Bull 3x ERX, Developed Markets Bull 3x DZK, Technology Bull 3x TYH, Large Cap Bull 3x BGU, Small Cap Bull 3x TNA, Mid Cap Bull 3x MWJ
Nasdog…..Ultra-Pro QQQ (TQQQ) and the Ultra-Pro Short QQQ (SQQQ) is tied to the NDX. These ETFs are listed on the Nasdaq exchange the other three pairs of 300% or -300% leveraged funds will be listed on the NYSE. They are:

Ultra-Pro Dow 30 (long) UDOW

Ultra-Pro Mid-Cap 400 (long) UMDD

Ultra-Pro Russell-2000 (long) URTY

Ultra-Pro Short Dow 30 (short) SDOW

Ultra-Pro Short Mid-Cap 400 (short) SMDD

Ultra-Pro Short Russell-2000 (short) SRTY

Archived			03-07-2010	SICK-TIME	02-20-2010	02-15-2010	02-08-2010	02-01-2010
01-25-2010	01-18-2010	01-10-2010	01-03-2010	Holiday	12-21-2009	12-14-2009	12-07-2009	11-30-2009

Economic Releases for the Week of 02/15/2010

Date

Release

For

Consensus

Prior

March 15