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A Technical View - TBLR11.15.10

Model Summary:

Model internals broke down Friday.  The SPX shifted from the Primary Buy (1221) and Long Position 50% Cash 50% to a Primary Short (1199) and Short Position 100%.  As of Friday’s close, six of the five indices being tracked were in Primary Shorts on the Daily count.  Only the RUT remains in a Primary Buy and Long Position 50%.  The model has handled market volatility over the past few months relatively well.  While some gains were paired, we remain +8.23% from inception.  The model will continue to position itself to profit from real, tradable moves while limiting risk. 

The Weekly and Monthly counts (intermediate and long term) remain bullish.

Model Performance Update1:

Inception to date returns:         Model     +8.23%

                                                S&P500    +1.27%

Market Summary:

The S&P 500 opened Friday at 1209.07 and hit an early high of 1210.50.  The index was under pressure for the entire session, hitting a low of 1194.08 and closing at 1199.21.  Market action was again weak.  I had pointed out early last week that the index was not holding support at 1220 as would be expected.  I also pointed out a bearish engulfing pattern that developed on November 8th and 9th.  As we moved lower, 1200 was mentioned as the next level of support that needed to hold.  This level represents previous resistance, the 20 day exponential moving average which currently stands at 1195.97 and an intermediate term uptrend line which extends back to September 2nd.  Friday’s lows broke below all three of these key levels, closing below 1200 and the uptrend line.  The weakness exhibited last week leaves the index open to lower prices near term.  With 1200 having broken, the index is poised for a significant retracement of the recent rally from 1040 to 1227.