Market Setup Updated

Get ready for fireworks...a failure of the overhead trendline and control, indicated in red on the chart below, targets 810 to 800. I am currently short EURO from 1.40ish and short TF, EMD, ES and NQ via weekly systems. FYI, weekly trades may add another entry at this friday or next, but the hold time for weekly trades is 3 weeks to 3 months.

Please note that the ten year bond is not confirming the recent highs. In fact this is the largest non-confirmation divergence I have ever seen between Equities and the ten year, indicated in light blue on the chart below...not good.

SP500 Primary Trendline an setup

SP 500 PE Ratio Breaks supports...

SP500 PE Ratio has broken supports, next real support is in the 7 to 5 area. When looking at PE's I prefer to look at the Dow, which also has a lot more history. If it is any indicator or where support actually exists, then we are looking in the 3 to 5 area for support for PE ratios.

ES Sets Cycle Low

What the significance of the reaction is will clarify as we progress. However the next bearish daily cycle will likely be an important point to examine - which I will do on at that time.

SP500 still setup for a short

The S&P500 trading systems are currently looking short. If we get to levels much above here the systems will likely trigger short. I will make sure to post if any of the major index systems do setup and trigger. How it looks to me is that the jobs number on Friday will be a high probability for a short entry. Sell when people are happy and promoting trumped up numbers sounds like a reasonable trade to me.

Below is the chart that I posted last week for easy reference.

SP500 Earnings from 1936

With first-quarter earnings basically in the books (99% of S&P 500 companies have reported for Q1 2010), today's chart provides some long-term perspective to the current earnings environment by focusing on 12-month, as reported S&P 500 earnings. Today's chart illustrates how earnings declined over 92% from its Q3 2007 peak to Q1 2009 low -- the largest decline on record (the data goes back to 1936). Since its Q1 2009 low, S&P 500 earnings have surged (up over 700%) and currently come in at a level that has only been exceeded during the latter years of the dot-com and credit bubbles.