S&P 500 Weekly Update for July 23, 2010

The market was not kind to the "Bears" this week.  However, our EMA strategy still remains bearish for the third week in a row.  Overall, market volatility remains extremely high with the bull tarts hoping and wishing that everything is "ok" in the Land of Oz.  The market on Friday liked the "EU Bank Survive Stress Test that indicated its banks could survive if its economies decline by less than 1%.  And get this, only seven banks in Europe failed this test.  (Give me a break.  That is not a stress test.   It is not even a test at all.  What if the EU economies decline by more than 1%, say 3% to 5%.  Now, that would be a stress test for those European banks.)

I have included two charts for your perusal.  The first chart is illustrates the EMA strategy, whereby the 13-wk EMA < 34-wk EMA.  Please refer to the notes inside the chart.  The second chart depicts the Point & Figure Chart of the S&P 500.  As you know by now, the reason I like P&F Charts is because they demonstrate very clearly the four phases for each market cycle: accumulation, advancing, distribution, and declining.  Once again, refer to the notes inside the P&F chart.

Currently, I am 26% invested in the following inverse (200% Leverage) indexes: DXD, QID, TWM, and SDS.  My largest "inverse position" is in SDS.