12/13/10: Beware of the Top III

[brosin]

As a follow up to the previous two versions of my "beware" posts, I give you the third.


With the next FOMC meeting tomorrow 12/14, and the Fed Funds Rate giving a clear bearish signal over the past week, I think it is very obvious that everyone should at least be cautious and watchful for a top.

Even if one decides not to heed the warnings, it would not hurt to have an extra eye on things given the odds of where we are in the Fed cycle *and* what the Fed action has been showing in the FFR the past week. Couple that with the AAII sentiment as shown over the weekend, and I really think it is time to beware.

As mentioned earlier, I am currently allocated 26% long, 74% cash. In real life I am all cash in my trading account (sold FAS Friday afternoon) excluding my 3 penny plays. My IRA is all long, but from a trading perspective, I am less bullish than I would care to be.




2/26/11 Update: Thumbs down / bad call

[bellevuetrader]

Great news Brosin! Hope it does pullback a bit...I'd like to BTFD

[drtracyb]

Where are we dipping to?

[novice08]

I have no idea, but I have s1 @1238.29 and s2 @1236.12...

[brosin]

Putting aside for a minute what the FFR has been showing, the FOMC numbers are pretty remarkable when you think about it:

Sept 20, 2010 22:27:38 GMT -5 brosin said:

• There have been 12 meetings in the past 19 months
  
• Avg pivot is 2.3 sessions away from an FOMC meeting
  
• Only one pivot was a low
  
• In 2010, avg top is 1.4 sessions away
  
• The *last 5* FOMC sessions have seen a new market high the day before the meeting or the day of the meeting