Will the Dow put the kibosh on the current rally?

The market is
bouncing as the sell-off that occurred the other day gets adjusted and filled.
The sell-off is complete and now the market is faced with the prospect of
moving to test the highs made earlier this month. I am in cash. I am up close
to 7% so far this month and chose to stay on the side in preparation for the
next sprint to take place in a week. I will be back in the saddle as they say.
I am acting as a greyhound and after fueling up on activities designed to
channel energy properly am ready for the next sprint. In a matter of days the
greyhound will step up to the line and take off. The intention is to prosper
to the tune of 1.5-3% per month. That is the necessary level of performance it
will take on a consistent basis to deliver what those that entrust me with
their precious greenbacks expect. That is the pressure that I face month after
month. Well, this month the delivery of a gain better then 6% is certain. It
has already happened. Now let’s look at the market today and see what is
currently going on. Futures are up nicely. They are firming into the morning.
Economic conditions are improving. The stock market is the place to be right
now with your money as January sets the tone for a decent year and although
midterm election years typically see a market bottom the bottom that will be
made later in the 3^rd quarter could very well be close to where we
are right now. That is entirely possible. Right now the DJIA is down slightly
so far this year. It is bouncing but will it have the necessary buying power
to enable it too rise above 10885? It really needs to cross 11k to stay
bullish. The Dow is the drag on the overall market. Small and mid-cap
instruments are favorable over large caps. The Dow is in jeopardy of causing a
negative divergence that will put the kibosh on the current rally. The 50-day
line was tested relative to the SPX and the test was passed as it spiked after
brushing along side it the other day. It spiked nicely. The Dow is still
trading below its 50-day line and drags the overall market. The NDX will brush
up against its 50-day line today. It will happen this morning. Yesterday’s
morning action was similar and the market failed later. If this market does
not make a run for the highs and the Dow fails to cross its 50-day line as
well as the NDX failing to cross its line today then this market could
experience a more serious decline. All eyes are glued and it is my preference
at this time to stay in cash and pick cautiously and selectively as the sprint
takes shape in a week.

I am not going to get into stocks today. That will come on Monday when you
will get close to 25 selected longs and shorts. That is what is in store for
you on Monday. I will be in NYC tomorrow and will spend this day preparing for
that important rendezvous with the one and only Eagle in all his glory
radiating a light that the spiritually sensitive recognize as bright as the
light that emanated form his ancient ancestor back in time to a former NOW
that to this day is still revered and remembered throughout the world. The
Hawk and the Hound wait in the wings hanging on the periphery. The trip to NYC
is about revitalization and getting properly prepared to make the next sprint
to deliver intense performance to those that work with me directly. I will be
hanging on 10^th street between A and 1^st tomorrow
morning form the time it opens for over 2 hours getting transformed into a a
vital being with intense focus and boundless energy in a body that ages slower
then the average being. RAM is expanding. RAM will have access to an office in
Santa Monica California and will be operating from that venue 5 to 10 days a
month. Google Santa Monica and check it out and understand the reason why. The
action is designed to benefit myself and therefore all of the partners that
choose to work with me. It is my intention to kill the stock market this year. I
have already begun that endeavor as I am up near 7% while the SPX trades up
1.31% for the year. So let it come up. I don’t care at all. I am busy setting
up my base of operations in Santa Monica. Saint Monica. My favorite of all the
Saints. From that precious spot located just 5 blocks form the Pacific Ocean
and around the corner less then a minute walk from the nearest Starbucks, I
intend to make a fortune. That is my intention and commitment. The intention
is to make a fortune for myself and each and every being that joins me.

I will do this trading the stock market in a style that I have complete confidence
in. The style gets tweaked here and there. You have been following me for a
while now and clearly notice the shift in style to accommodate current market
conditions. It is not an easy stock market. The market of the second half of the
decade in the 1990’s was rare. It was the most powerful bull market of the
century. That is not the market we are in right now. We are at the tale end of
a cyclical bull market that is mature and topping. That is the gist of the
current reality and a cautious approach is necessary until the tape says
otherwise and the signal to get involved in DJIA is above 11k. That would
confirm favorable odds and a continuation of the cyclical bull market that
begin in March of 2003. The push above the top of the trend line is key right
now and another attempt at that will happen today. It failed yesterday. We are
near the end of the month. It is typical that market mark ups happen at the
end of the month especially after the moderate sell-off that happened last
Friday.

That is that. The business of the day is calling. It is the best time of the
day just the perfect time for a cup a special blend that I pick up in Santa
Monica, that glorious place by the sea. I will be in NYC in the morning. I will
ride up to the place where the energy never ceases. The eternal pulse of that
magnificent rock on the right coast is waiting to embrace this soul as he
prepares to touch in with the Eagle, Hound, and Hawk. The market always rises
when I travel to NYC ,and it rises especially hard when I travel on the 5am
Acela.

Mr. Rothstein also writes Wealthcast, a monthly newsletter about the technical
behavior of the markets. He has been quoted on Bloomberg, CNNFn, the Dick Davis
Digest and the Dow Jones Newswire. Since 1993, Mr. Rothstein also hosted
WealthCast, a radio show in the Washington DC area covering the stock market.