WHAT YOU SEE IS WHAT YOU GET
I'm going to provide further clarity into my change in bias regarding the markets tonight. I have been sounding these warning bells for roughly 3 weeks now, with a best case scenario of a choppy market ahead over the intermediate term.
Mid-way through September I had a strong upward bias for the market. These biases are prone to changing on a dime, as they have, when a set of circumstances arises that are in direct contradiction to my prevailing bias. I don't wait for the trend to turn, like a majority of those who analyze the market consistently, before I put out strong opinions...usually against the prevailing trend.
Some important turning points from the past 12 months to demonstrate this tendency:
June 2012 - To the confusion of many I turned bullish a week ahead of the bottom, explicitly stating that it would be the bottom for the remainder of 2012. http://www.zenpenny.com/wp-content/uploads/2012/06/SPX.gif
January 2012 - I suddenly and unexpectedly took an aggressively bullish position on the market, after being conservatively bearish for a number of weeks starting in December http://www.zenpenny.com/wp-content/uploads/2012/01/dj-301.gif
October 2011 - Probing for the bottom in September with a stated max downside target for the S&P 500 of 1080, caused me to go on a buying frenzy on October 4th (exact day of the bottom) http://www.zenpenny.com/running-four-deep/
All of these decisions were misunderstood by readers at the time due to the prevailing bias being so strong and the structure of the markets appearing as weak (or strong) as it did. There were, however, strong indications of a change in trend that were being telegraphed by a potpourri of small clues littered in dark corners of the market where nobody bothers to look.
I see those same clues here. That doesn't mean the Dow can't poke its head above 12,700 before falling. This rally may last another week. Entirely possible. I am not playing this market for one week rallies, however. I want points where the risk/reward is maximized in one way or another.
At this point, I believe that risk/reward is slanted heavily to the downside. A few days of green won't change that.
