Don't Ask Why - Just Follow the Tradewinds

A Tradewinds Update

noreply@blogger.com (Steve) — Thu, 06 Nov 2008 13:07:00 +0000

Its been quite awhile since my last post. There has not been much to say when the market has been universally in a downward trend. Now we are entering a period where we may be seeing the stabilization or even reversal of the trend.

We have had a nice run/bounce leading up to the election and then got the smack in the head reminder yesterday not to get to giddy. In reality, the bear push back was completely to be expected. The next few trading sessions are going to be important to see if we can establish a higher-low from what we saw on Oct. 27. If we do that and then move past the high set on Nov. 4, you can start to feel good about the long side again – cautiously.

TradeWinds for Week Ending September 19

noreply@blogger.com (Steve) — Sat, 20 Sep 2008 18:11:00 +0000

I don't have any unique insight to explain last week's market events, nor any crystal ball as to what the next week will bring. I am a big believer in the momentum indicators that we track, but when the market is gyrating the way it has, its hard to read the charts.

Our indicators say that the market is still in bear territory but we are seeing swing to the upside, in normal times that would be a cautiously optimistic sign to the bull side investors. Our best sectors still appear to be Housing and Financials, if you can believe it. I am actually liking the second tier banks that have held up well since they have little exposure to the Big Mess, and could very well come out the winners - look at BBT for example. TOL is also looking nice in the housing sector.

The only advice I am going to give this week, is be careful out there.

TradeWinds for September 18th

noreply@blogger.com (Steve) — Thu, 18 Sep 2008 12:23:00 +0000

It has been quite awhile since my last post. I know there are a few faithful fans out there who check the site from time to time. I try to keep the main charts updated each day, but since I never got a the readership I had hoped for I slacked off on the posting. I personally believe in these momentum indicators and watch them faithfully for my own investing purposes. Hopefully some of you have discovered the value as well.

I don’t have any unique insight into the market of the economy. Its hard for any investment system to work when fear is in control of the markets because the patterns that we count own get disrupted by irrational movements. The only good thing that I can say at this point is the obvious that the market is way oversold. Our moderate momentum indicator has dropped below –2.0 (-2.5 for just the major indexes), which is an extreme not normally reached. There should be some kind of bounce here. For that bounce to be sustained we are going to need to have the financial world settle down and get away for the bail out of the day headlines.

I would urge a bit of caution of jumping on the gold and silver bandwagon. GLD and SLV ETFs still have very negative long term momentum indicators, although improving based on yesterday’s big jump. Before yesterday GLD was down about 30% from its peak and SLV was down about 50%, so its hard to tell just yet whether this is a panic fueled bounce for these metals or the beginning of a new trend. The duration of the financial turmoil will certainly play a part in this.

I am sitting tight on my holding right now and selling options selectively to raise cash. This crisis will pass like all the others, its just a matter of when.

TradeWinds for Friday August 15th

noreply@blogger.com (Steve) — Sun, 17 Aug 2008 23:16:00 +0000

If anyone is paying attention, they know that I have posted in awhile. As I have said before, without much of an audience out there, the motivation is hard to keep it up. However, I do update the TradeWinds momentum charts everyday and the TradeWinds Top 25 lists and TradeWinds BlackBox. If you have not been following those, you have been missing out on some excellent trend picking.

So where is the market at these days? Certainly the current trend is to the bull side and we think its a solid one. One reason we believe that is because its not just a blind across the board, rising tide lifts all boats kind of rally. Its selective and rotational.

Biotech, pharma and healthcare remain the leaders as we have pointed out for some time. Tech is coming on strong - loving those semiconductors. Housing and financials are rebounding but doing so cautiously. Of energy and commodities is taking it on the chin as part of the rotational pattern. I expect to see a swing back for those sectors to test if we are now in a bear market for those guys.

Our momentum charts are in the neutral zone, but getting stronger. If you look just at the major indexes, their momentum is now is the smooth sailing TradeWinds zone, as are the majority of stocks that we track. We don't publish momentum on the stocks because we are constantly cherry picking those to make sure we have a mix that is in the bull moving sectors.

The strategy is now to buy the pull backs, but with caution. We are approaching the dreaded September-October trading whitewhater. We will be careful to watch if our current upswings peaks just in time to set the take for the early fall plunge.

Happy Trading.

TradeWinds Update

noreply@blogger.com (Steve) — Wed, 30 Jul 2008 12:11:00 +0000

I have been a bit lax on posting, but as always I keep the charts and top 20 lists up to date should you want to follow them yourselves.

After two rollercoaster days, I would say we are in a net positive position, although we still have work to do to get to calm trading waters. Our slow momentum indicator held to the flat to slightly positive tilt during the market gyrations and the number of sectors in negative tradewaters has dropped from 30 to 25 over the past week.

I think what we are seeing is some big sector rotation going on as energy is being unwound as the leader and healthcare (XLV), biotech (BBH), techs (QQQQ, XLK) and even financials (XLF) are getting more attention. This is especially true in the small cap segment of the market (IWM, IYR). My thought is once this rotation is completed we will start seeing some steady upward movement in our momentum charts. Of course this can be disrupted at any moment by a big shock from geopolitical events, oil event, or some banking industry event, so don't get greedy as this scenario unfolds.

TradeWinds for July 21/22

noreply@blogger.com (Steve) — Wed, 23 Jul 2008 11:45:00 +0000

I have been watching the week's rally with much interest to see if will get a firm foundation, and so far that seems to be the case.

Our momentum charts are all pointing in the long direction, but the all important slow momentum, while improving, is still in stormy waters, so the all clear cannot be signaled yet. All 30 out of 40 indexes/ETFs that we track are still in the stormy TradeWinds.

We have been saying that Healthcare (XLV), biotech (BBH) and Pharma (PPH) are the leading sectors for now. The latter has slipped a bit but the other two remain strong. There is improvement across the board with the exception of Oil/legacy energy. China is coming back strong, as are financial stocks. (Be wary of the financial area once the 30 day freeze on naked put selling expires.) Precious metals still confound me, so I am staying away from them.

In summary, market is showing some signs that its has bottomed and is now looking beyond the election and sees the end to the housing/credit crisis. But we all know that Miss Market just loves to play with our heads, so take nothing for granted. Let the momentum indicators tell you if this bounce turns into a trend or is just a correction within the crash.

Rally On.

TradeWinds for July 18th

noreply@blogger.com (Steve) — Mon, 21 Jul 2008 12:20:00 +0000

We finished last week with all of our momentum indexes making nice moves to the long side, but keep you excitement under control.

Our long term or slow momentum index while clearly moving off a bottom is still very much in stormy TradeWinds, so we need to be cautious as this bounce/reversal plays out. Clearly financials are roaring back to long life, but the question will remain if the rally holds. Healthcare, pharma and biotech are the clear leaders right now as energy is starting to fade as oil corrects.

If you are a long player, be selective and vigilant to snatch profits until the Miss Market indicates that she is ready to switch partners and go with the Long Waltz.

TradeWinds for July 17th

noreply@blogger.com (Steve) — Fri, 18 Jul 2008 11:42:00 +0000

Finally, the bounce we have been looking for. The next question to be answered will be whether the bounce turns into a trend breaker.

Our momentum charts have all turned up for the first time in a long while, but they are still sailing in very stormy TradeWinds. There are lots of hopeful signs out there for longs, but its hard to make trading decisions on hopeful signs. Be patient, if you choose to do a long trade, snatch your profits early.

As we suggested a couple of days ago, its now clear that oil has topped out for now and is in correction mode, so legacy energy is now a place to stay away from. That gives the sector leadership over to the biotech and healthcare sectors for now (XLV, PPH, BBH). Gold and Silver may be a place to make some money, but I am not sure. There are some resurgent sectors such as China (FXI), consumer staples (XLP) and transports (IYT), but they are still in negative TradeWinds. We would like to see them get into at least neutral waters before getting excited.

Today (Friday) should be an important day to test this bounce. Pre-market is showing some bad numbers because of some of the earnings reports from yesterday. If we are really into a counter trend move, we should see the market shake off these early blues. This doesn't mean an up day, just a strong move off the lows. Remember, its option expiration as well, so that can add to the unpredictability of the day's trading.

TradeWinds for July 15

noreply@blogger.com (Steve) — Wed, 16 Jul 2008 12:20:00 +0000

I am getting more confident about two things. One, we have seen the top for oil. I mentioned some time ago that there has been a divergence between the oil (USO) momentum indicators meaning the price kept making new highs while the momentum indicators were not making new highs. This has actually been going one since about mid-April. I suspect this has gone on longer that it should because of the psychology of oil, but now I think the chickens have come home to roost and its time for a major correction.

Along with a top in oil, I am seeing more evidence of a bottom for the market in general. Certainly a top in oil would probably coincide with a market bottom, but also I think the financial sector has been way oversold and the tech sector is reasonably healthy (see yesterday's results from Intel).

Still nothing to get overly excited about except that the pain is going to ease up. On any given day, however, some geopolitical or economic bombshell could whack the markets, but I think we will start to see a stabilizing of the downward trend setting the stage for an upturn of some degree.

TradeWinds for July 14th

noreply@blogger.com (Steve) — Tue, 15 Jul 2008 13:07:00 +0000

Well I am back from vacation and I see that the markets have not changed much in the last week. Oh sure, fear is rampant, but looking at our momentum indicators, particularly the slow momentum shows a flattening to slight up bias. Don't take that as a cause for any immediate optimism, we are still being buttressed by strong negative TradeWinds. It is starting to feel like we may be seeing the worst of the worst.

Today's pre-market is looking a bit iffy so there may be another wash out day by Miss Market before we can really call a bottom. Volume has been increasing during the recent sell-off which suggests that the pool of sellers may be ready to be exhausted. Even if we do get a bottom, that does not mean that sunny days are ahead. We should see an oversold bounce at some time, but after that it could just be a flat market in tepid TradeWinds as opposed to a raging rally. Let the momentum charts tell you when we are back in positive TradeWinds.

In the meantime, if you want to trade long, you need to be looking at Biotechs (BBH), Pharm (PPH), Metals (GLD, SLV) and miners (SLW,GDX), and of course Oil (USO).

TradeWinds for July 3rd

noreply@blogger.com (Steve) — Sat, 05 Jul 2008 18:25:00 +0000

Happy 4th of July Weekend to all. To celebrate we fired up the grill for our annual ribfest celebration. Those baby backs were extra yummy this year.

I am now heading on vacation for a week and will not be posting. Not much to say anyway. The market is still not a fun place for the long siders to be. As it was last week, the market is even more oversold. Maybe that means a rally soon, maybe just more pain. I gotta believe its the former, but who knows. So I will take a week off and maybe our indicators will begin to get some new life. I can guarantee you that it will happen some day, picking the right day is the key.

Happy Trading.

TradeWinds for July 1st

noreply@blogger.com (Steve) — Wed, 02 Jul 2008 11:53:00 +0000

Is this a Bear Market Bounce? Or have the sellers become exhausted?

We won't know the answer to that question for awhile, but its fairly certain we will see a bounce here. I think the bounce will be meaningful in that it will be stronger than the other bounces we have had over the last several weeks as we have taken our waterfall ride into the Bear pool. I base this on some nascent trend reversal patterns in the 1 and 2 hour momentum charts. Forecasting from those can be a little tricky because when you think you are seeing clear weather coming you find that you were just in the eye of the hurricane. We will have to watch our daily momentum indicators to tell us if the bounce will turn into a real trend reversal or not.

There is only one non-commodity sector that is making a stealth bull move right now, and that is biotechs (BBH). Also showing improvement, but sill sailing in hostile TradeWinds is pharma, PPH, and healthcare, XLV (do you see the theme?). Take a look at that if you want to play the long side. Techs are stirring a tad, but nothing to get real excited about just yet.

Caution, bordering on fear, is the word of advice for the long players

TradeWinds for June 27th

noreply@blogger.com (Steve) — Sun, 29 Jun 2008 21:57:00 +0000

The only good thing to say about last week, is that it will be hard to get any worse in the weeks ahead.

We have been down four straight weeks and the market is just aching for a oversold bounce. Its started on Thursday and actually continued a bit on Friday. Although the headlines all focused on the Dow taking another 100+ point hit, the broader market held up pretty well and of the the 85 equities we track, 45 were gainers. Of course, none of that is much to get excited about. Our momentum indicators continue to put us in stormy waters.

We will be watching next week for some evidence that the market wants to put in a bottom in this range. We are also keeping a close eye on oil. Our momentum indicators are telling us the is a divergence that could lead to a correction. In other words, oil (USO) is making new highs while the momentum indicators are weakening and not setting new highs. If we can get some sustained downside momentum going on oil without some political event stirring it up, it could have a see saw effect and fling Miss Market into the air.

Our TradeWinds Black Box had another great week despite the crashing market. We had eight tradeable wins and 4 losses. We outpaced our benchmark SPY, 2.28% to -3.3%. Come to our site and check out this weeks BlackBox picks and Top 25 lists.

TradeWinds for June 26th

noreply@blogger.com (Steve) — Fri, 27 Jun 2008 00:40:00 +0000

It was laundry day for Miss Market, and everything got washed out. For the bull in us lets hope that the last excess of optimism has been wrung out of the market laundry and we can call this a bottom some day.

Miss Market did check the pockets of the laundry for gold, silver and oil before she put everything else through the wringer.

If you are a short trader, go for it, otherwise sit back and watch how the market reacts from here. Our momentum indicators will tell you when things are getting better. And actually the indicators didn't get that clobbered and our moderate momentum actually eeked out a gain based on residual momentum from yesterday. So once again the market is grossly oversold, but when that will make a difference we have yet to see.

Now if you look back at yesterday's post, you will see that I noted the curious behavior of the financial stocks yesterday. They started the day real strong and held their own after the Fed announcement and started to rally again. Then they just collapsed like the air going out of a balloon. First thing this morning we found out why when Goldman Sachs released their market notes on financial stocks, Citicorp in particular, which was one of the catalyst for the market wash out today. Now its obvious to me that sometime yesterday afternoon some big money players found out about the Goldman Sachs report and started dumping big time - maybe Goldman themselves. No one ever investigates this stuff, but it so blatant. Its one reason why its so hard to make money as a small investor in the market these days.

TradeWinds for June 25th

noreply@blogger.com (Steve) — Thu, 26 Jun 2008 00:31:00 +0000

We are finally getting the long awaited oversold bounce, but the the bigger picture is pretty much unchanged.

Our moderate and fast momentum indicators turned upward today and if we get any kind of follow through tomorrow our slow momentum indicator should do the same. We will still be struggling against some pretty bad negative TradeWinds, so it won't be much to celebrate.

I was real disappointed to see the big sell off in the financials at the end of the day after posting some nice intraday gains. Not sure what that means. Its was either trader action or a bull trap. Tomorrow should give us a better indication. It was also weird to see the Dow collapse at the end of the day, but the techs, small caps and even OEX and SPY held up pretty good. Curious.

Just like we are getting a long side correction, I also think we are starting a correction in oil, which is long overdue. This may give a little bit of legs to the bounce we are seeing.

So that leaves us pretty much still on the sidelines, although I have liked selling some calls and even took a short position in Oil which I won't hold for more than a few days.

Happy Trading.

TradeWinds for June 23rd

noreply@blogger.com (Steve) — Tue, 24 Jun 2008 11:35:00 +0000

The Bears sure had to love yesterday's action. Every little attempt to rally got sold off.

And now its looks like the small caps and and techs are goings to sink to catch up with the already sunk big caps. Is that a good sign for the hopeful longs?? I don't know. I do know that this market is obsessed by oil and until the fixation breaks it will control how the markets move. I am also starting to feel that the financials are being beaten down even more because of the fear of the oil bubble bursting and another round of derivative speculation coming down on their collective heads. I have no evidence of that, only my gut.

There is nothing to be excited about in our momentum charts unless you are a Bear. I keep wondering when we are going to get the oversold bounce......

I do know that our Tradewinds Black Box continues to generate some real nice short term trading plays. Yesterday the Box generated 9 winners out of 12 picks, with three of them returning over 4% each yesterday. But nobody is watching so I will just keep these to myself.

TradeWinds for June 20th

noreply@blogger.com (Steve) — Sun, 22 Jun 2008 21:18:00 +0000

We are down to only one argument for the long side of the market and that is it is very over sold at this point. That is not much to go on.

If you are short side investor, the market is playing to your hand right now, particularly in the big caps. The mid and small caps along with some techs are hanging tough although sliding into neutral TradeWinds and heading into negative waters.

I am not much good at short investing as I have found you have to be pretty nimble. For example, financials may look to be fertile territory for a short investor, but they may have just been washed out an at a bottom, so I would stay away from that. The same goes for energy and the long side. I got to believe oil is about to correct, but one headline can change that.

All that said is that it probably a good time to just sit on the sidelines and watch, or do as I will probably do and sell some calls and make a little cash while I wait to see what the market is going to do this summer.

Check out our Top 25 lists and TradeWinds Black Box for some investing ideas on both the long and short side. Our Black Box was a perfect 5-0 last week for picking stocks that made a tradeable move.

TradeWinds for June 19th

noreply@blogger.com (Steve) — Fri, 20 Jun 2008 00:42:00 +0000

Even with all the major indexes moving up today, we still see a split market between the Big Cap indexes and everything else.

The DIA was up .25%, while IWM was up .83% and QQQQ was up 1.56%. While our Slow Momentum indicator remains in turbulent negative TradeWind waters, under the covers you will find that the small caps and tech stocks are in neutral TradeWinds.

All of our momentum indicators a going flat line, so its kinda hard to predict what is going to happen next. Tomorrow is option expiration day, which can always lead to all sorts of extremes (although sometimes it is just a blah day). I still sense that the general feeling of the market is that its oversold and resisting any further down moves. If sentiment changes on the big caps, we could see a great leap to the long side.

Looking at the sectors oil and energy are leaders, but there is weakening, so I think there is a correction about to set in there. Agriculture remains strong and biotech is making a stealth surge. Midcaps and small cap are in the neutral category but showing signs of strong base formation, so I would watch them for a thrust to long side during the summer. Precious metals are also hanging tough in the neutral TradeWinds and even showing some strength of late, I am not convinced if that is just the doom and gloomers keeping it afloat or if there is something more to the move, but its worth keeping an eye on.

Let me add this final editorial comment. I believe that the election in November is going to be one of those times in our history when there is a dramatic shift in the body politic and general thinking of the country. Call it the tipping point theory or whatever, but I think we will find that 2008 goes down with 1860, 1932, 1960 and 1980 as elections that truly shifted the direction of the country. Miss Market is also aware that there is going to be a new man on the block and is trying to position herself for what he will bring.

I you haven't guessed, I do believe that Barrack Obama will be the next President. The mega big caps are probably not the place to be given that outcome - particularly mega energy companies. Entrepreneurial, innovative small cap companies probably will be in favor, particularly in alternative energy areas. Mega healthcare is probably not a good investment, but again, innovative health technologies or services will be - which could explain the positive movement of the biotechs as of late.

It should be an interesting six months for politics and investing.

TradeWinds for June 18th

noreply@blogger.com (Steve) — Thu, 19 Jun 2008 00:48:00 +0000

Its pretty hard to make a case for the long side of things right now. If you are long inclined, there are a couple of silver linings to the dark cloud.

Today's action moved our Slow Momentum indicator to the downside after a couple of flat days. Its not a decisive move but discouraging nonetheless. Moderate and Fast momentum still showed long side gains, although weakening. Since we are still sailing in negative TradeWinds and nearly have of our 40 sectors and indexes are negative as well, you have to believe that short is the way to go. I am a die hard long trader so I look for those silver linings and I think you find them if you look at the 6 month charts of the major indexes. Right now, only the DIA and OEX are really looking ugly with the December and March lows looking like they may be in play. Look at QQQQ, IWM, MDY and even SPY and its not that bad. It looks like just a minor correction after the big run off the March lows. While the DIA is off 7.7% from its recovery high off the March low, MDY is down only 3.6%, QQQQ down 5.5% and IWM down 4%. SPY is the worst of this bunch, but looks like its in a good support spot.

This tells me that its the big caps that have been suffering and the broader market still is basically healthy. How long this divergence will hold is another story, but it does mean it not quite time yet to throw in the towel for the Bulls, although caution is certainly the key word, along with staying away from the big caps.

TradeWinds for June 17th

noreply@blogger.com (Steve) — Wed, 18 Jun 2008 01:12:00 +0000

The action this afternoon was not to our liking, but in the end did not do immediate damage to our recovering momentum indicators.

After a couple of nice up days after the Thursday low, its not surprising to see a down day. The techs stood in there pretty good and overall we are still seeing recovery in our indicators and across many of the stocks and ETFs we follow. In fact we saw more strength "under the covers" than we saw reflected in the indexes, so that is a good thing.

Caution is still the overall strategy as our Slow Momentum is still struggling in negative TradeWinds even though it is leveling out. One good day puts us back to neutral, but one bad day ......

Meantime if you have been checking our TradeWinds Top 25 lists and TradeWinds Black Box you are missing out on some mighty fine trade calling. The Black Box this week is currently is a perfect 5 for 5, and over the last four weeks we are 24 - 8 in picking long side tradable stocks in our Black Box.

TradeWinds for June 13th

noreply@blogger.com (Steve) — Mon, 16 Jun 2008 11:38:00 +0000

We got the bounce and hold that we were looking for in Friday's action. Now we want to see some follow through at the first of the new week.

Friday gave us some encouragement with a strong day and most importantly a strong finish going into the weekend. This had the affect of turning our Fast Momentum indicator to the upside and moderating the down slope of the Moderate and Slow momentum indicators. Since we are way oversold on both the moderate and fast momentum indicators, we could see a nice bounce if we get some follow through long side action.

We had a lot of eroding of our sectors during the week, leaving us with only 8 sectors still in positive TradeWind waters, 14 in neutral and 18 in stormy negative TradeWind waters. So while we are seeing signs of some short term strength, don't get too excited or let you money sit for too long in a long side play because this background strength is still iffy.

Happy Trading

TradeWinds Special Post

noreply@blogger.com (Steve) — Fri, 13 Jun 2008 17:17:00 +0000

As we enter the final three hours of trading for the week, we here at TradeWinds think its going to be a crucial period and we are optimistic.

First, its looks like, at least for the short term, the oil rally has run out of gas. We are seeing a divergence set-up for our Fisher Transform and TSI indicators that tell us the USO has hit a near term peak and will be headed down. Watch the trading action for the rest of the day and if it stays down going into the weekend, you can think of taking a short position next week. This would be a take-the-profits-quickly position because of how oil is tied into the political world. Also don't open that position today - you don't want to wake up Monday morning to see that the US has bombed Iran.

We also like the way the small caps have held in there pretty good through this down draft, a bit better than the big boys. This means folks are still willing to take a bit of risk in the market. Watch the afternoon action closely. If we finish strongly along with oil down, it will be a cause for optimism going into the weekend.

Watch for our weekend update to recap the week and look ahead to the next.

TradeWinds for June 12th

noreply@blogger.com (Steve) — Fri, 13 Jun 2008 13:31:00 +0000

That sinking feeling continued for our momentum indicators, but there are signs that we are nearing at least the short term bottom of this down draft.

Our Slow Momentum Indicator is just barely hanging on to Neutral waters, and barring a huge rally today will like fall into the red after today. The big question now is how long we will remain in the turbulent waters. We see that our Fast Momentum indicator almost flattened out yesterday and if the pre-market rally holds it will turn up at the end of today. The Moderate Momentum Indicator is WAY oversold, particularly when you look at the major indexes alone. This all signals a short term rally.

We will watch closely if this downdraft was just a correction of the bull move off the March lows to the May high, or the end of the correction of the bear move from the October highs to the March low. For the bull argument, I am watching for a day when we hold a rally and end near the days highs.

Once again, if you want to play the long side, be a quick hitter until the new trend is clear.

TradeWinds for June 11th

noreply@blogger.com (Steve) — Wed, 11 Jun 2008 19:06:00 +0000

I will be updating the momentum indicators and Top 25 Lists later on today. The commentary to give on those updates is pretty clear before running the numbers.

You have been watching the markets, probably with anxiety if you are on the long side. While there was some indications late last week that the long side would take control again, it succumbed to the surging oil prices. There has been attempts to rally or hold a support levels, but they have been weak. As a consequence, our momentum indicators have run into choppy waters. Its not quite yet stormy, but pretty darn close.

You psychology should now be shifting to being on the sidelines, or going to the short side. If you insist on playing the long side, then do so with the guerilla mentality of striking quickly and getting out quickly. Right now the only sector that has some real momentum going to the long side is the agriculture sector. The oil/energy sector scares me a bit because of its frothiness.

Time to be careful

TradeWinds for June 6th

noreply@blogger.com (Steve) — Mon, 09 Jun 2008 01:04:00 +0000

Okay, I was thinking I was pretty smart when the market zoomed on Friday. I expected a down day on Friday but not what we saw. When I said that this market could move 200 points either way, I really didn't expect what we saw. So where do we go from here?

Our momentum indicators have been damaged with the long or slow momentum falling into the neutral TradeWinds zone. Our moderate and fast momentum indicators turned down but are also in oversold territory. My thinking is that Friday was clearly an excessive reaction to the idea that Israel would attack Iran and the unemployment report, which logically should have been greeted with favor. But mania has taken over the oil market and so long as that has a grip, then its going to be hard to make much long headway on the market in general.

Sit on the sidelines and make plans to go either short or long depending on how things shake out over the next few days is the best advice I can give at this point.

Check out our Top 25 Lists and TradeWinds Black Box for some trading ideas, if you want.