5th Failure to Hold Closing Above Oct Highs in S&P 500

On the most recent SPXU trade, the only people who told me they got in the trade either got in on Friday morning or were still in it from the prior attempt. So on a pragmatic basis, I am treating the trade as still active. The average price of those who told me they were in the trade is about 37.30. I will leave the blog entry price the same at 37.90, and have suggested using the initial stop of 36.40 at this point. Despite fear of another stop out, I think it should be in place because once either the bull or the bear tree gets completely chopped down, I think the market will move strongly the other direction. With the successive doji, bearish engulfing, and spinning top candlesticks, it looks like bears are winning, especially now that there is another close below 1100 on the S&P.

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The chart above shows the 5 closes back below the Oct high after it was exceeded last month. This choppy battle will lead to a significant directional move soon in my opinion.

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This chart is an hourly chart of SPY showing 3 little island top formations. Every time the market gets back above 1100 ( 3 sizable gap ups) it has had sizable gap downs back to the lower end (or below) of the preceding range. I can't see this type of mess lasting much longer.

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The dollar index showed a bit of follow through after managing to close 2 days in row above the 50 day MA. It made another big gain against the Euro today. Further gains in the dollar will put pressure on stocks.

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The chart from Sentimentrader.com shows that large speculators are extremely net long on commodities. The chart above weights equally to the CRB index (which is heavily weighted to energy). We see that they are almost back to the same level as at the commodity bubble peak last year. This shows excessive speculation across the commodity board.

As I said several months ago, the freebee money lent by the Fed to large institutions is not going back into economically productive loans. The Fed has been lending at 0% interest to these large banking institutions. But they then across the board raise consumer credit card rates to 29.99%. Also, while I don't have anything to post here, I don't think that business lending is all too great either. So where is the money going? Obviously into speculation on stocks and inflation sensitive issues like commodities and the US dollar carry trade.

So maybe those banks are making out on paper right now in these areas. But how much leverage are they putting up in the futures and forex market? Are they going to be out of those contracts while they are still in the green? If this gamble goes bad for banks at large and they don't get while the gettin's good.........