8/5/2008
Market update: SPY remains in a sell state at 128.36 since a 136.5 sell signal in mid-May (6% open profit). The market has had a nice run down (if you were short) and l The action remains sloppy, however, with a sell stop just above 129.15. ooks as though it's trying to form at least an intermediate term bottom.
Positives: the market is probably short-term oversold, sentiment is very negative, volume on up days has recently been somewhat stronger than volume on down days.
Negatives: the fundamental situation remains atrocious although it often does until 6 months after a bear market bottom, the market has failed to make a 20 day or 4 week high and there is the possibility that the action since mid-July has been a wide, sloppy flag pattern, which is more often a continuation than a reversal pattern.
At any rate, the market does not require clairvoyance, only adaptability. If the market closes above 129.15 and follows through, buy. Often the first buy signal following a protracted decline is a fake-out, but that's OK since risk is pre-defined - I would sell if the market broke below 125.
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