Market Far Below Trendline - NOT

I was watching the Larry Kudlow show and Don Luskin made a comment about the economy being far below the trendline.  This brought to mind a chart of the stock market which I constructed several months ago.

This shows the Dow Jones Industrials being far above the long term trendline NOT below.  The market peak in 1929 is clearly above.  The peak in 1966 is still below the upper trendline and in 2000 and 2007 was clearly above.  Based on this, we are probably due for 6 to 8 more years of sideways to down movement with possible correction to Dow 4000.  Remember, this is a semi-log chart showing the normal long term economic growth.  Why anyone would think more than this is possible is beyond me.  Maybe things "ARE DIFFERENT THIS TIME".

DJIA and Utilities Divergence

Here is a chart of the DJIA with the DJ Utilities in white.  Notice the divergence on the head and shoulders.  Many trading books show this as a sign of lower prices ahead.  Clues, Clues...

I went long with TNA

I bought a small amount of TNA yesterday.  I think we may move up soon.

Near term bottom Near?

I was studying the daily and hourly charts and considering the comments on CNBC and Bloomberg.  I mentioned in one of my previous posts that the Elliot wave count on the hourly chart looked to be early in this move down.  I agree with the previous post about not relying on predictions exclusively and I try to remain flexible in my opinion since THE MARKET IS ALWAYS RIGHT.  Anyway, subtle clues do exist as to the line of least resistance of the price trend.  The hourly Elliot wave count still looks incomplete.  The TV experts are all talking about a bottom any time and I still see no clear divergence in the daily or hourly chart.  Combined with this I am ALWAYS early in my prediction of a reversal and I see a reversal any time now.  In the past, I have noticed a reversal hits me in the head like a hammer.  When it does happen I don't believe it since I am so beaten up by my previous attempts at finding a bottom.  Therefore I believe the market has further down to go.

Violating Trading Rules

I have been day trading with small positions to prove to myself I can do it over the long term and some days make about $40 some days lose about $40.  Today I made 2 mistakes.  I traded against the trend and I moved my stop away from my standard 1% and lost $107.  I heard a webinar with Larry Levin and remember one idea distinctly.  He said he violated his day trading rules twice in the first 5 months of 2010.  He said you must follow your rules.  Today I violated 2 rules in a row and lost.  In 2010, I must have violated good trading rules hundreds of times and my account is smaller because of it.  Every day I find it difficult not to chase prices and buy at a high and wind up selling lower.  This is my Achillies heel, my weakness.  Unless I can stop myself from chasing I may may have to go back to work.

SP500 back to 1150?

This is just my thinking, not advice. If you want to make money do the opposite.
I'm looking for a return to SP1150 starting near 7/2/10. If I see any strength by the close I may buy some TNA or BGU. An extended trendline from the January highs through the May lows may provide support. Also, the McClellan Summation Index is showing positive divergence indicating more stocks are advancing than declining relative to the June lows. The chart shows the McClellan Summation Index plotted in the upper window in white.  It is higher now than at the June lows.  This is divergence(the price made a new low but the indicator did not).  This effect can be seen at the February lows between price and RSI plotted in the lower window.  RSI is currently not showing divergence.  These indicators are not always correct so beware.  They should be used as a guide showing how the trend of price might be turning.  Price will not turn until it actually does.

SP1150 in near future

This is just my thinking, not advice.  If you want to make money do the opposite.  I'm looking for a return to SP1150 starting near 7/2/10.  If I see any strength by the close I may buy some TNA or BGU.  An extended trendline from the January highs through the May lows may provide support.  Also, the McClellan Summation Index is showing positive divergence indicating more stocks are advancing than declining relative to the June lows.