August 4, 2010

Short-term: 4 yellow – tending yellow
Intermediate-term: 2 green, 2 yellow – tending yellow
Stock targets: 52% swimming, 30% neutral, 18% sinking

Most stocks are through their resistance and indexes are either thru or close. Almost everything is overbought – currencies against the dollar, foreign markets against their local currencies, US stocks, bonds, etc. Nothing indicates that it will change — and sentiment is not yet complacent — but with everything overbought, the next change of direction will likely be significant. From this point, the short-term indicators will indicate cracks and the stock target % will indicate when everything reaches an extreme and the intermediate-term will lag too much to be very useful.

In the meantime, enjoy the ride and be careful. This is unfortunately precisely the sort of time when an “unpredictable” external shock is what changes the direction.

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