Watch closely.  You’re about to see something rarely seen among professionals.  You have heard approximately 10,000 times the 11th commandment:  Never move your stops down (up) after they’re set.  Be disciplined and allow the market to take you out.  Then of course there is Emerson (Thoreau?):  “A foolish consistency is the hobgoblin of small minds.”  To make a long story short we are moving our stop away from the market in the SPX.  

From 921.75 to 991.04.  What does this mean?  Does this mean that we have been consorting with Satan and fallen prey to easy morality and laissez faire capitalism and questionable diet plans?  Does it mean that we finally fell under the spell of Ronald Ray-gun and our brains went?  Does it mean we have converted to Zoroasterinism?  No.  No.  A thousand times no.  It means we looked at the chart and said that the rigid  observance of Basing Points would not really mark the beginning of a new phase in the markets.  We have been inclining to more and more long positions over the past few months while not abandoning short positions.  And in fact readers following these letters should have been busily hedging and trading.  The easy profits in shorting are over — except of course for the well chosen case.  Portfolios should be inclining long — but in a trading mode.  The word of the hour is situation by situation tactical opportunistic trading.  This does not mean that some of these trades might not become long term trend trades.  Just observe the Basing Points. (We will post a letter demonstrating this shortly.)   The market will see saw for some time here in a two or three hundred point range.   Probably for a minimum of six months.  The formation at hand has another month at least to go before it is clear.  It could easily break to the downside– to the upper neckline, and then, at that point events would determine the fate of the cyclical –or secular bull market.  At the moment the  market is approaching — or within reach — of the 200 day moving average which will be a formidable barrier.  It will be pierced.  Whether that penetration is definitive or not waits to be seen  We expect further work on the downside.  Does this mean that the possible large Kilroy (H&S) bottom will form?  Only Zoroaster knows.