Timing Market Turns - 02/10/2006

Swing Trade- still 100% long

Investment Trade - still 100% in cash


We are letting our stops tell us that we are wrong. Our SPX stop is the trigger for the Dow and SPX swing trade. That stop is at the SPX 1250. For the weaker NDX, our stop is at NDX 1630, just below the January low. The stops are mechanical and remain in place on a swing until taken out or moved to protect profit after day 3 or 4 of the swing.

After seeing more than a few tops develop over the years, a characteristic always present during the process is the different structural 'looks' of each senior index. This is evident currently by simply comparing the NYSE, S&P 500 and the NDX.

The structure that I want resolved at this time for all the indexes is whether we are in a corrective bottoming process of the downward correction from last month's high, or is there more downward correction to go.

As to the NDX (and the Composite), the early January sizeable gap at NDX 1600 requires redress and covering. When that will occur is not in my ability to predict. I do believe that it weighs on the index's strength needed to move upward. I don't believe as many do that it affects other indexes like the NYSE or the Dow.

Strong intraday resistance barrier levels are at SPX 1269, NDX 1665 and Dow 10940. As you can see quite a great area exists above the current levels (at 1230 E.S.T.) for failure, especially in view of how easily the indexes have declined in recent weeks versus the struggle to rise in upward moves.

All said, we will take the swing position into the weekend if the indexes can close near or above those optimistic intraday resistance levels. We see that as less than a 30% possibility.

We will update at the 1530 E.S.T. intraday peak we expect in that timeframe.

Good Trading and God bless

W. B. Busin