Be careful what you wish for with the Dollar…

AN EXCERPT:

There is a tremendous amount of negative news floating around, seemingly everywhere. This news-flow just happens to come at the exact time that the market is undergoing its first real corrective process since March of 2009. Because the market is dominated by computer algorithms whose job is to “run with the pack”, we keep getting these wild and wicked rallies and plunges.

When stepping back, the end result appears to be classic trading range being hammered out. The overall market is routinely swinging hundreds of points, back and forth, both scaring and confusing individual investors and professionals alike. It makes for harrowing and exhausting days for all active market participants. But there is a silver lining and I’ll get to that in a minute.

We recommended to buy AVD several weeks ago near 7.50. It rallied to 9.50.

In the recent market sell off, it hovered in the mid-8’s and we asked that you accumulate below 8 whenever you get the chance. Well, it dropped almost back to 7.50 on Tuesday.

The stock’s average daily volume is 100k shares. Something is up today as volume is exploding, already at 750k shares in just the first hour.

This is what happens when a stock is “discovered”. My guess is that Goldman’s upgrade of Monsanto is awakening interest in this stock. Or someone could be accumulating it for an buy-out.

Our target remains the 10-11 area…

ADDENDUM: The stock has traded over 1.4m shares, or 14x average daily volume. The stock had been up as high as 8.96 and it has reversed to trade as low as 8.08. Obviously there is something going on, but it may simply be a large buyer has found a seller for accumulation. By day’s end the buyer could own stock in the 8.50 or midpoint of the days range.

We published this SPX hourly chart in our premium service last weekend. The setup was obvious though the “obviousness” of it gave us reason to be suspect in this rail-thin and wicked market.

But once I got around to not over thinking, my mind was at ease in anticipating this rally that will take us to the 1120-1140 area…

I know, I know. The crys of “bullshit rally” are being shouted from the rafters today. But get ready because yesterday was some kind of crescendo. The end of the day sell off was a beautiful bear trap.

There are many very large energy-oriented funds that were forced to liquidate. Someone bought a lot of stuff on the cheap. I’m not saying we are through hammering out and testing the low-end of the trading range, but I am saying that we are not falling off the cliff right now. Which means we rally to SPX 1120 over the next few days/weeks.

The fever is broken. Now get outside and enjoy the clearing skies!