I’ve posted a few key 60 minute index charts as well as the EUR/USD daily chart below.  Although I remain near-term bullish, I also remain very cautious at this point.  I covered the charts of quite a few key indexes and sectors in the video overview yesterday, all of which seemed like objective longs with appropriate stops in place below however, I have not made these “official” trade ideas.  Of course, it is up to each trader or investor as to what they trade and when they trade it so I will continue to share what I see and although I can not give any specific investment advice to anyone, I will say that I think it would make sense for less nimble/experienced traders to keep things light for at least the remainder of this week.  Yes, the charts are bullish right now but the downside risk also remains elevated at this point.

Normally, I would be all-in long here as my final (initial) swing targets for the key indices have been hit with nice positive divergence and bullish patterns in place on the 60 minute chart.  However, although I am net long, I am still keeping things light for now as something just doesn’t feel right.   It’s almost “too perfect” an entry from a charting perspective but more importantly, from a fundamental perspective I am concerned that we might finally be on the cusp of a major “boy who cried wolf” point in the market.  For over four years now, as the global banking system and balance sheets of the worlds largest sovereign nations have continued to deteriorate, we’ve seen the global central banks use gimmick after gimmick, rabbit after rabbit pulled from various hats, even what many interpret as unconstitutional abuse of powers (from the fed) to do whatever they could to keep the long-dead, too-big to fail banks upright and walking….sort of like the late 80’s comedy film “Weekend at Bernie’s”.

The problem lies in the fact that although the retail investor isn’t buying it (as evidenced by the unprecedented and unrelenting fund outflows), the institutional investors as well as both the retail and institutional traders seems to gobble up whatever gimmick dejour the fed and other central banks seem to keep coming up with (QE1, 2 & 3, operation twist, TAF, TSLF, PDCF, CPFF, TALF, etc…)…and those are just some of the FED’s actions since 2008.  We’re already clearly seeing diminishing returns from each additional stimulus measure that comes out of the FED and ECB and I yet every time the markets start to slide and, like clockwork, the FED and ECB start jawboning the market about this or that action they are contemplating, the traders jump back in and start bidding stocks up in anticipation and the day is saved as all that whinning from the poor little investment bankers, King Jaime Dimon, and the likes got them exactly what they wanted from good-ol’ Uncle Ben.  However, just like in the aforementioned Aesop’s fable, the big bad wolf does indeed exist and just when everyone has written off these warning signs as just another false alarm is most likely when the wolf will finally decide to rear his ugly head and wipe out the flock of sheep.

Bottom line is that this bounce could have legs and as I mentioned in the video, Monday could have even been THE bottom as the market goes on to make new highs from here.  However, trading is all about risk reward and as enticing as it sounds to load up 100%+ long on leverage at a possible bottom, the risk to doing so does not outweigh the possibility that still remains elevated of getting caught on the wrong side of a massive gap down or sudden intraday reversal due to one of the many potential shoes that can drop at any moment.  Nothing wrong with being long here but just make sure to set you stops appropriately and adjust your position sizes and overall percentage of your portfolio commensurate with the risk that you are willing to accept should you wake up on day soon to find the market set to make a large gap lower on some shocking, but not-so-unexpected event.  I will try to post some more trade ideas later today but for now, a lot of the etf’s that I covered in yesterday’s video seem still offer some objective long side trades.