Heads Up Post For Friday - New SPXU Trade

Place a day only buy stop order at 39.75 on SPXU tomorrow. Use 37.00 as a GTC sell stop after entry if filled. Use money management guidelines here if guidance is needed.

For those who haven't used a buy stop here's what to do......choose "buy" and then choose "stop" from the order type (limit, market, stop, etc) choices. Then you will put 39.75 for the stop price. The trade won't be filled unless the S&P 500 drops about 2.2% tomorrow.

This post is just a heads up for tomorrow. The stock futures are down about 2% right now, and the US dollar index futures had a huge gap up to open near Wednesday's open. This is looking like a false breakdown in the dollar and corresponding failed breakout in stocks as I've talked about for the last 2 weeks or so.

So the main reason for this post is that there may be a large gap down in the stock indexes tomorrow, but with the market in the current position, it is not going to deter me from recommending a new inverse ETF trade. Granted the position size will have to be smaller because the stop loss will be wide due to the gap.

For those that didn't keep up with the news on Dubai, this is the type of thing that I think will be coming to the front more and more in coming months with Dubai just the Poster Child of excess and linked to what was one of the very biggest commodity bubbles/bull markets in history. The implosion of oil prices has obviously now months later lowered income and profits so that all the debt they took on can no longer be covered. Debt service (interest payments) is drowning them. Ditto with housing. Ditto with government spending in my opinion.

I have never fear mongered on this blog (I have no reason to) and certainly am conscious not to do that after major declines because that is when people will "fall for it" and make bad investment decisions. But after a nearly 70% rally in stocks, I don't consider it fear mongering. It is a reality check on a world awash in debt from "money" that came out of the ether and, if left to substantial free market forces, will surely largely return to the ether. And yes I know the Fed is "printing" money. But if you think that the amount of printing/monetization (say a few trillion $) counter or overbalances the amount of credit (say a couple hundred trillion $) that would disappear under free market conditions via housing/real estate, financial derivatives, etc, then I think you owe it to yourself to better understand the system of our money.

So, while it may be a sucker play to sell on a large gap down, after living through the market the last several months, I have become increasingly convinced that it would/will take a major news event to really shift the psychology out of the weakening uptrend to a legit downtrend. I don't know if this is it, but I expect it to be something with regards to credit/solvency issues.

With the technical set-up such that a close below 1100 on the S&P triggers a sell due to a thrice failed breakout, and the potential for a gap down below that level tomorrow, I am not assuming this gap will be bought and the market will move quickly to new highs like has happened so often the last few months.