I have been working on various projects waiting for the market to signal a new advance.
Given the last post I made about the market breaking above decade long secular resistance my expectations have been muted. I have to maintain the thought however that we live in a QE environment and anything can happen. My expectatons are that without QE we may have seen a post-2009 high and be in the early stages of a cyclical bear market.

Tuesday will be a day-6 count in a possible advance. We are looking for a rise in the NASDAQ, S&P500 or NYSE Composite of 1.25% or greater on volume higher than the day before to signal a new confirmed rally. Another possibility is an undercut of the last low (2774.45 on NASDAQ) to start the counting process all over again. A factor I watch is IBD6000 percent of stocks with an E distribution rating (heavy distribution). We are sitting at 18.6% a bit high for successful rallies in the past. There seems to be an optimum level of blood in the streets for successful rallies to launch from 7.4% to 16%. In history going back to late 1994 there have been 80 follow through days. Only one successful (tradeable) rally occured in the month of June and zero in the month of July. Very few leading stocks have set up long enough in basing structures to be considered ready to breakout and move up out of a sound base. So except for what is in the next paragraph I am in mode of shorting rallies that appear to stall at logical resistance levels.

I read in a McClellan report about commercial traders having moved to very serious net short positions in the US dollar and T-Bonds. I guess this could indicate a possible topping process in these instruments, the dollar and bond markets have been sucking money out of the equity and precious metals markets. Commercial traders have gone to the biggest net long position on the Swiss franc since 2007 also. A dollar and bond top might free up money to move back into equities...