A Down Signal on DIA 11/23/11

The Dow Jones 30 fired off a down signal after the close today. Not good. The chart structure resembles another period of time back in 5/23/08 eerily. It is identical to the down signal on 5/23/08 after which the market dropped and DIA went from 126 to 80 over a few months. I don’t think the market will repeat itself. That would make it too easy, too simple. Nothing about the market’s moves is simple. But the global fundamentals are looking more ominous than the collapse of the housing and real estate markets. Our borrowing along with the borrowing in Europe is setting the stage for a bigger collapse. The top hedge fund soothsayer says we will see it by end of 2012. So what do I do? Jump for shelter?

I think the trading down band is stretched and I have no choice but to wait for a small bounce to start taking the down moves. At this rate my 401K system will kick me out of equity funds by the first week of next month. I will patiently wait the 30 days Fidelity wants me to wait. I hate that about Fidelity. It is that holier than thou behavior. I will never get an independent Fidelity account. All right. I am stuck with them on my 401K but in case they wanted to know how I really feel….

My SPY puts have gained value and will reduce the losses from my partial long positions from my 401K system, triggered early this month. The only thing that saved me was my ICE system on SPY that still told me exit on long. I know it is quirky but I trust it because of that. The markets are quirky also. Those nice simple systems don’t cut it on the major indexes. I wish I had taken some of the down signals that came along on individual stocks earlier this week and last week and wish I had purchased put options. Perhaps I can take it on the small bounce that I expect to see soon.

The only saving grace would be if the US consumer saved the day by purchasing their way out of this mess. A friend of mine asked me the other day, what are we good at in the US? My first thought was “consumption”. Yes, I think we can do a massive Thanksgiving buy that shows the world and the Corporations that feed us that we the US consumers are not done. If that happens we can get another whipsaw and the markets move back up. The longer the market goes down, the less likely we would say is the chance of us just having a higher low and the whole market moving up. I think there is a decent chance that this market gets ugly; but what good is such a prediction? Zero. Better to say I don’t know and that I will trust my chart signals.

Below is a chart on DIA showing the down signal now and another DIA chart showing the down signal in 5/22/08. Quite a resemblance…mulling that over.  Got to protect my capital first.