TAM's Pedagogics - Monday 03/28/11

Mar. 28, 2011 7:43 AM ETSPY
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Contributor Since 2011

Kevin A. Tuttle is the CEO and Chief Strategist of the Money Management & Capital Services firm Tesseract Asset Management, LLC (TAM). TAM serves as the General Partner of Long/Short Equity & Alternative Investment Hedge Funds and operates a Capital Services division oriented toward small & medium size companies seeking capital. TAM also owns the registered investment advisory firm TAM Portfolios, LLC (TAMP), which offers Mr. Tuttle’s unparalleled Long Only Growth Portfolio (LOGP) Separately Managed Account (SMA). Over the last 2 decades Kevin has become an industry-recognized technician and has distinguished himself with his signature 100-Year Market Theory and corresponding Dow Chart. His unique quantitative and technical approach to managing assets has lead TAM's growth and success since its inception.

Since the Markets’ top on the year, the 2/22 2%+ selloff Monday, they have shown 7 distribution days.  As for accumulation days, there has only been 1 for the NYSE and Zero for the NASDAQ (not including the quadruple witching two Friday’s ago).  When the Broadening Wedge formation arose and the intermediate-trend (IT) was broken, we discussed a potential low-volume retest to confirm.  Friday was just such a day.

 

If the Bears are going to remain in control of the short-term trend, now is the time.  If not, like we penned late last week, the retest of the intermediate-term broken trends would no longer be valid and the Bulls will have a shot at redemption. Nonetheless, our camp is still pitched with the Bears as 3 of the 4 Sisters hit the underside and held; all except the Russell 2K – she managed an intra-day breakthrough, but managed to close just below.

 

Experienced money-managers, investors and traders know that the risk reward trade is what it’s all about.  This couldn’t be a better place to be.  Since the break we’ve positioned ourselves short, hedged the bounce and are ready, at a moment’s notice, to relinquish the hedge strategy and return full fledge Bear.  If the probabilities do not hold and the Bulls return, we’ll remain short-hedged until clearer skies arise. Moral of the story, do not attempt to predict what the market is going to do; rather ascertain probabilities of what is going to happen and position accordingly.

SPX/SPY Daily:

SPX Daily

NDX/QQQ Daily:
NDX Daily

Good Luck & I Hope this Helps!!!
KAT

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