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The Intelligent Trader's - Long and Short of It

From: Robert A. Christy

Editor/Publisher, ‘The Intelligent Trader’

http://www.intelligent-trader.com

http://www.christyinvestments.com

Date: September 28, 2009

The Numbers

Major Index Bullish Percent

BP NYSE	Xs @ 84%	OFFENSE – Previous high was 86 (01/2004)
BP OTC	Xs @ 74%	OFFENSE – Previous high was 76 (01/2004)
BP S&P500	Xs @ 88%	OFFENSE – Previous high was 88 (01/2004)

Our indicators continue their push above 70% and in HIGH RISK territory. Please don’t jump feet first into this market. The talking heads continue to hype this market because it’s newsworthy. They will change their tune as soon as the market changes direction. Remember, these folks were berating people like me for getting into the market back in March when the indicators first turned. If you’re in, stay in – if you’re itching to get in, it may be prudent to wait for a better entry point.

Major Sector Bullish Percent

Consumer Discretionary	Xs @ 86%
Consumer Staples	Xs @ 86%
Energy	Os @ 78%
Finance	Xs @ 90%
Healthcare	Xs @ 82%
Info Tech	Xs @ 94%
Industrials	Xs @ 88%
Materials	Xs @ 88%
Telecom	Xs @ 70%
Utilities	Xs @ 76%

Note: Last week the Energy sector flipped from OFFENSE TO DEFENSE.

Sub-Sector Bullish Percent

SAVI	X @ 58
BANK	X @ 60
BIOM	X @ 60
DRUG	X @ 62
ELEC	X @ 62
GAME	X @ 64
INET	X @ 64
prec	O @ 64
PROT	X @ 64
auto	O @ 66
COMP	X @ 66
HEAL	X @ 66
OIL	X @ 66
REST	X @ 68
WAST	X @ 68
meta	O @ 70
TELE	X @ 70
TRAN	X @ 70
buil	O @ 72
CHEM	X @ 72
EUTI	X @ 72
LEIS	X @ 72
MEDI	X @ 72
SEMI	X @ 72
fore	O @ 74
FINA	X @ 76
SOFT	X @ 76
WALL	X @ 76
BUSI	X @ 78
MACH	X @ 78
FOOD	X @ 80
HOUS	X @ 80
RETA	X @ 80
TEXT	X @ 80
GUTI	X @ 82
OILS	X @ 84
REAL	X @ 84
AERO	X @ 84
stee	O @ 84
INSU	X @ 86

Green = Favored Yellow = Average Red = NOT favored

X = Offense O = Defense

Note: Please note the color change in many of the sectors.

The bullish percent indicators continued their climb up the charts this week telling us that the rally still has life. I’ve been pouring through the watch lists and trying to divine what comes next.

I have tightened all of my STOPS and have purchased PUT options on a couple of over-extended names. I have also rolled up my Google PUTS to lock in my profits when Google broke through $500. [Note: If you are an Intelligent Trader subscriber, make sure your accounts are approved for Option Level 2.]

This week’s missive …

The rally needs to end sometime doesn’t it?

I woke up this morning and the dollar was gaining, stocks are holding their own and the Fed is rumored to pulling back on the next phase of the stimulus.

The talking heads and their pundits would like you to believe that up is down and down is up. I don’t think anyone knows what is going to happen next. Those think they know clearly don’t. As for me, I don’t have a clue.

This I do know – I am long stocks until I’m not. That’s why we use stops and keep an ever watchful eye on our trading capital.

On the calendar this week are some economic numbers and that will give us the underlying fundamentals to digest. At the end of the week, Obama boards the big bird at our expense and heads to Europe to pitch the Olympics. He and Oprah are going there to spread a little largesse and try to emulate what Maynard Jackson and Andrew Young did for Atlanta. If Chicago gets the bid, you can thank the African nations and the US taxpayer for making it happen.

Since the March low, the Dow Jones Industrial Average is up more than 55%, which by any measure isn’t bad. The MSCI World Index comes in at a plus 65% over the same time frame.

So the argument today is this – bear market rally or a new bull market?

There is enough evidence to argue both sides. Stocks are up, gold up, commodities up, interest rates holding after an early rise, and the dollar has gotten creamed.

The unemployment numbers in up and more than 7 million folks have lost their jobs since the recession got underway. Lots of other folks have taken pay cuts or cuts in the number of hours they work.

Obama has been making news lately suggesting that these numbers will get worse before they get better. It’s hard to imagine how so many people can declare that the worst is over when the unemployment situation is getting worse. Economists are calling for a jobless recovery. These are probably the same folks that were telling us to expect a soft landing.

The real estate woes continue – people are falling further behind, foreclosures are increasing, and the next wave of mortgage resets is about to smack us below the belt.

My last point is this – are you spending money or saving it? I’m saving as much as I can. If I don’t need it, I’m not parting with my cash unless I have to. The only people spending money right now are government types.

The indicators speak for themselves and as you can see, we are further up the risk scale than we were last week. Stay long – until you aren’t. If you haven’t taken any defensive measures – do it now.

That’s about it for now. Let me here from you if you have any questions.

Robert Christy

The Intelligent Trader

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P.S.S. The currency market is the place to make money this year. If you’d like to know more about how you can participate in this, just send me an email and I’ll send out the information to you.

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Robert Christy is a professional currency trader, stock trader, money manager, author and speaker. Mr. Christy is the President CEO of Christy Investment Group, Ltd., a fee-only registered investment advisory firm. He is also the Managing Partner and Portfolio Manager of Crabapple Capital Group, LLC and the editor/publisher of The Intelligent Trader, a subscription based long/short trading service. At the time of publication, Mr. Christy may from time to time write about stocks in which he, Christy Investment Group Ltd, Crabapple Capital Group, LLC or The Intelligent Trader has a position. In such cases, appropriate disclosure is made. Under no circumstances does the information in this column represent a specific recommendation to buy or sell stocks. Mr. Christy appreciates your feedback and invites you to send it to rac@intelligent-trader.com .

Robert Christy

The Intelligent Trader

The Christy Investment Group

P.O. Box 625

Alpharetta, GA 30009-0625

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