I will re-state what I stated at the end of last year, that modeling of mine along with another one from a more skilled and experienced trader, establishes a good probability of a significant low between the end of Jan and March. I went to cash based on this on the last trading day of last year as I mentioned in a prior post, except holding my MO which has held up well.
Sharply declining stock prices along with sharply rising bond prices is the ideal buy setup for stocks, it is referred to as the Jaws of Live by Larry Williams. This is what we have here. It is a large scale pattern so cannot be timed on a daily basis.
I am currently long the SP futes at 1317 on a short term trade placed yesterday that was in my trading service as well. This trade is just designed to buy into extreme short term weakness and exit quickly. This does not mean I am aggressively long large size, it is a short term trade that will most likely be exited on Tuesday. It think we will drift at these levels more or less for the next two weeks, then stage a bit of a rally, drift down into March, then go up in a somewhat choppy fashion into July.
