Markets finally showed a move and as some of my charts were giving my an early warning that bulls might have a shot of breaking the triangle to the upside I stopped out of shorts early in the week and got long small caps and rest cash. SPX saw then a break of 1410 and got a very sharp move higher as expected a big move was coming either way – the thing was just to trade the breakout in the direction which were to the upside giving a text book target of 1437-1440.

After we got into the range of 1430-1440 I slowly started to buy short positions again – not yet fully short but have been adding shorts on late Thursday and Friday as I expect we are getting near a long term top here.

My plan is to way to go 100% short until my signals tells me that markets is going down again , until then I will be patient and wait for the best entry to short markets , as it is possible we can get a move to 1450 on SPX.

So the plan currently is to wait until signals tells me that trend is reversing to the downside again , and as soon I get those I will be loading 100% shorts again – until then we should be patient and wait it out. Very good idea to slowly start adding shorts, as SPX closed above upper bollinger band and everytime we did so we either had a PULLBACK or made some kind of top – so it is now very likely that markets made some kind of top on Friday or very close to one.

I’m watching SPX 1440 closely and 1450 , but all in all I expect markets to top at maximum 1450 the upper trendline from the past tops which is just above us, before a bigger decline down to 1300 on SPX.

Dollar is again extreme oversold and with dollar so oversold , it clearly favour the bears , because as soon the dollar starts to rise – markets is going down.

Conclusion:

All in all – we have some big events coming on 12th September with court in Germany which I think will be APPROVED – but might come some conditions to it, which could be worrisome – FED meeting we wont get any QE3 like they have begged on since last year ,, we need at least a -20% drop in markets before we get a new round of QE. Right now I would slowly begin to add shorts at those levels from 1430-1440 and if we go higher to 1450 I would begin adding heavy and as soon I get signals that markets is turning south I will be loading up fully in shorts.

As of Friday I’m 50% in shorts so waiting to add rest in this week when charts tells me to do so.