T-Minus 10

With the exception of the European Cup I have little idea what is happening overseas and with the exception of Matt Cain's perfect game I have little clue domestically. I know there's the Beard speaking tomorrow and possibly the SCOTUS decision as well. If I was paying attention to this I'd probably be discouraged about now and ill prepared for taking action, but since I made a strict decision to use a couple of filters for the noise I feel well positioned to act as warranted.

While the countdown has begun, I'm not ready to declare all systems go just yet. Over the weekend I listed two criteria I was looking for this week: a cross over of the secondary trend I use and waning volatility. In addition yesterday I noted in a post that I was becoming suspicious of the lack of leadership coming from the Russell 2000 and postulated that if it did not begin to step up than this rally would be lacking in broader participation and money flow would be focused upon the same old leaders. Today, the first two criteria were met and in addition the Russell led the pack with a 1.8% gain, finally breaking through a key pivot lower high.

Secondary Cross

Historical Volatility Declining

Russel Pivot Break

Additionally the timing tool I follow is continuing to show green shoots.

Green Shoots

Over the past couple of days a number of quality break outs have occurred and had follow through which is a promising sign; of note have been EBAY and LL. There have also been a few that broke out yesterday but became a tad extended and pulled back like SXCI and CHSI. In general the market has looked healthier than it has in months but with a 6% move off the 06/04 bottom I wouldn't be surprised to see a pull back, especially after four straight up days.

From a swing trading perspective a window of opportunity is opening. Over the last two days I've been active but cautious taking some very small positions and very fast exits. I'm still leery about holding for more than a day until the primary indicator I follow flips and volatility continues to compress and a solid up trend emerges. Again, the windows is open so if you can snatch the apple pie while its cooling now may be the moment to do so.