THE TRENDS: The long term trend remains up. The intermediate trend also remains up even though the market closed slightly lower than the previous week (see image of Weekly SPY). As you can see the market closed at 135.49 above the 10 week moving average which is currently at 133.49. However, we need to be vigilant and watch price action closely at this juncture. On the left side of the chart notice the area circled in green. This is the weekly price action in July of 2011. The price action is very similar to this year. Early in July 2011 the market broke out above the average only to decline below it decisively the last week of the month. The market then had a severe correction phase.
WHAT I'M DOING IN 401-K: I'm staying in because at this juncture the intermediate trend is up. However, if the market closes again below the 10 week moving average, the probabilities highly favor a more severe correction. I hope you all had a great holiday and stay cool this weekend!
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