Really no change in the M48 model since last week.   For the most part the major indices have been choppy and unable to close above the 50 day.  Today we had increased volume with a price decline which is a negative.  If price decline persists w/ increased volume the model will exist any S&P long positions which is roughly 33% of the Model as of this post.

What a sad blood bath year for Wall Street! However I am very pleased w/ the M48 as are the subscribers because the model has continued to cut losses short and let profits run.  Human nature is to not cut losses and to not admit a wrong – but instead to hold and hope.  The M48 has preserved cash in ’08 which will enable the model to capitalize when a trend eventually takes hold. 

AAPL ran up to 100+ only to turn around and close at 95 today.  The stop is at 88.86.  A gap could be filled below 85 – so as always we will cut our losses short and let our profits flow.  If AAPL heads North – the model will sell 50% of the position at 110 and move trailing stops accordingly to lock in profit.  Keep in mind that Apple only makes up 2.5% of the M48 model.

Back to the S&P.  The S&P looks like it wants to roll over again and test 860 and then possibly 820 if the 850/860 area doesn’t hold.  Based on probabilities I think we will retest the November lows again if we break 820 on the S&P cash.  Remember we add as price and volume increase and therefore the M48 will add when and if the S&P moves through 900 and more specific, 918 on a close.

Watching Crude the Dollar and Gold using ETF’s:   You can play the long side of crude by purchasing USO, OIH or DIG and placing your stops at the most recent support which was last week.  You can short the buck by buying the short U.S. Dollar ETF – UDN.  I also like Gold long using the ETF – GLD.  The obvious decline in the buck is helping crude and gold.  I will let you know when and if the M48 takes a position in any of these.  Stops and fill prices will be included.

Christmas Rally?  If it’s coming – it better come soon.

Have a great weekend,

-Doug

ps- Always read the risk disclosure above.  View this for educational purposes only.  Each investor has a different risk tolerance and therefore this information may not be suitable and should not be considered as investment or trading advice.  Videos coming soon to help further your pattern recognition significantly.