20090121PM, 15/40 EMA

Dow 8,228.10 +279.01 +3.51%.
Nasdaq 1,507.07 +66.21 +4.60%.
SP500 840.24 +35.02 +4.35%. Expect a fast acceleration up. Shorts from past two days are trapped and will push the market up. Resistance at 875 then 920.

The long government bonds may be breaking down.

Yesterday financials had huge sell-off. Yesterday the market indices price destruction with light volume. This morning was down slightly and when it couldn't break down further (into November 21) there was a sharp rally. Many financials had large large percentage moves up today.
After seven down days, look for a rally into Friday. If the rally is big, consider selling on Friday or Monday morning for a pullback early next week.


SQNM 25.54 +1.50. 52 week range 5.00 - 29.14.
HOTT 8.71 +.40.

XLF 9.27 +1.19. Back above November 21 lows. Good volume.
HIG 13.49 +1.98 (17.20%). Lightish volume. Needs volume to come in to sustain the up move.

Interesting idea, though it didn't get confirmed today with the markets up.
http://www.financialsense.com/Market/wrapup.htm
The breakdown of the seven year trend in the cross rate between the Euro and the Yen in early September was a major warning sign that significant deleveraging was underway. Within a matter of two months the Euro gave back six years of ground it gained relative to the Yen, and the stabilization in the markets in October and November of last year was associated with the sell off in the Euro relative to the Yen abating. Since that time the cross rate between the two currencies has fluctuated between roughly 1.16 and 1.30, with rallies in the cross rate associated with market rallies and declines in the cross rate associated with market sell offs.
What I have been watching for as a sign that the markets were heading higher or lower is a resolution to the upside or downside in the Euro/Yen cross rate, and yesterday brought that resolution, unfortunately, with a break to the downside. Not only did the Euro fall to new lows relative to the Yen, but so too did a swath of other global currencies as highlighted in the figure below in two separate panels, which means a test of the November lows is likely in the weeks ahead.

Interesting long term trading idea.
http://www.financialsense.com/Market/cpuplava/2009/0107.html
One great long term market timing tool highlighted by Brian Pretti is the 15/40 exponential moving average (EMA) cross. It gave a buy signal in 1995 and kept you in the market up until 2000 when it went into a sell. It ignored all the bear market bounces and didn’t turn positive until 2003, only to turn negative four years later in 2007, quite the track record in just the past decade and one half. As seen below, the signal is still a ways off from crossing and the current rally remains to be a bear market rally until proven otherwise.
Historically, the 15/40 EMA signal has had a great track record and would have gotten investors out in 1929 and kept them out until just after the end of the Great Depression in 1932. It also proved quite useful for most of the rest of the decade, though the signaling system did not perform well in the sideways action from 1937-1941.