MDM - Intraday market update July 5, 2011

Published : July 5 2011 at 13:11 ET
While we don't wish to argue with a trend, most of 2011 has been a relatively trendless, go-nowhere market, fraught with false buy and short points. As legendary trader Jesse Livermore once said, so much money would be saved if speculators learned to trade only when the opportunity was clearly present: "...I wish deliberately to reiterate it, that wishful thinking must be banished; that one cannot be successful by speculating every day or every week; that there are only a few times a year, possibly four or five, when you should allow yourself to make any commitment at all. In the interims you are letting the market shape itself for the next big movement."

 

IBD went to a buy signal without a follow through day on July 1, 2011. They also did this in the past with negative results.

While Market Direction Model does not follow IBD, it can use a follow through day as the initiation of a new buy signal or confirmation of a prior buy signal it may have issued.

In the meantime, we are carefully watching the leaders whose action will push the model either into a buy or a sell signal.

In other areas, precious metals are in a basing pattern which is typical of this time of year. May-July are typically periods of weak demand which result in basing or downtrending patterns in precious metals. Light summer trading volume adds further to the odds of a basing pattern being traced out.

Once quantitative easing manifests as QE3 and/or in substantial quantity from other debtor areas of the globe such as the UK and Europe, stocks and commodities should be the beneficiaries.


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