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Michael Noonan Edge Trader Plus Michael Noonan is the driving force behind Edge Trader Plus. He has been in the futures business for 30 years, functioning primarily in an individual capacity. He was the research analyst for the largest investment banker in the South, at one time, and he... More
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  • S N P - Caution For Bulls. Same For Bears. 0 comments
    Jun 1, 2013 12:17 PM

    Saturday 1 June 2013

    The market is undergoing a correction, but it is enough to call it a
    top? No. More evidence is required before saying that the Fed has
    thrown in the towel. If it takes more fiat to keep prices inflated, it will be provided. The alternative would be too painful for investors, [not
    of concern for the Fed], and too embarrassing to admit to the fraud of QE-Infinity to keep the bubble intact.

    The stock markets are the antithesis to gold and silver. The latter
    have an insatiable demand, as price has declined. The former is void
    of demand as price has risen to all time highs. The Fed has driven
    what participants there are to the markets because there are no viable "earning alternatives" to match "rising" stocks. The Fed has chosen to
    destroy retirees and anyone else seeking gains in interest bearing
    instruments as a vehicle for income in its efforts to keep the market
    [lie] alive.

    Just as there has been demonstrated manipulation on the Precious
    Metals, via naked short selling that has no intent of ever delivering
    what was sold, [anyone else would go to jail for the practice], the
    same holds true for the stock market. So how valid are the charts?
    They are all we have, so they must be judged based on what they show. At some point, the reality of [lack of] supply and [false]
    demand will prevail. All anyone can do is read developing market
    activity, for it tells the most accurate story of who is winning the
    battle, and ultimately, the war

    Here is what the charts say...

    The starting point is to give recognition to the most important element in reading and understanding any chart, in any time frame, and that is
    the trend. Trends have a proven tendency to persist, and when a
    trend stops, it takes time to turn it around. There are always signs to
    act as a guide.

    Since the 2009 low, price has been in a steady up trend, with a few
    corrections along the way. Corrections are a natural and healthy
    reaction within any trend. What we see for the month of May, [new
    highs], is a mid-range close. The market's message from that kind
    of close tells us that sellers more than met the efforts of buyers at the upper part of the highs. The current unfolding decline ran out of
    month before finishing, so we must deal with what is, as justdescribed, for it could have been worse.

    Yes, yes...woulda, coulda, shoulda; just stick with the facts as they
    are. The trend is up, and there is not enough evidence to say a
    change has occurred, or even may occur. The higher monthly time
    frame is more prevailing in effect than lower time frames, and it
    always makes sense to keep this in mind.

    ESA M 1 Jun 13

    The weekly time frame supports the trend of the monthly, up, and
    shows no sign of any change, at least none that would warrant going
    against it, at present. The last two swing lows show how long they
    took to correct, and how many points in each decline, before
    resuming the up trend. Volume has increased over the last two weeks
    as price declined, and using close stops, or simply taking profits, in
    individual stocksmakes sense, but the Fed Bubble has not yet burst,
    based on the current chart structure.

    ESA W 1 Jun 13

    The daily is the most sensitive to change of the three time frames
    covered. Even here, one has to respect past activity, like the April
    correction, and the market's ability to recover and rally to new highs.

    We can say that the trend is still up overall, but presently trading
    sideways. More price development is required in order to determine
    the character of the present correction. If this market is turning, and
    existing evidence does not support that conclusion, yet, we will be
    able to assess the quality of the next rally, as it unfolds, and make a
    more informed decision. We stress "as it unfolds" because there is no
    reason to "predict" or get ahead of the market until it tells us, beyond
    doubt, its intent.

    If volume picks up on the next rally and closes are strong, overall, then we can expect higher price levels. If the developing price activity is
    weak, as in lower volume on rallies, poor closes, increased volume and
    greater ease of movement on declines, then we put ourselves in a
    position to be in harmony with the current trend development.

    The track record of those who have been "predicting" a top and
    shorting the market while in an uptrend is very poor, so picking tops
    is not a profitable endeavor. Let the market reveal its message, and
    then follow along.

    For right now, the message is one of caution, for both the bulls and
    the bears.

    ESM D 1 Jun 13

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