The stock market is getting ready to break big time- the only problem? I’m not sure which way.

In favor of a strong market surge- the strengthening dollar (see a chart of UUP), and declining oil prices (the two might be going hand in hand).

The market was up nicely today in the first few hours of trading. Then, in a speech from Bernanke, he used the word “inflation” 29 times- hence the sell off, and the corresponding stronger dollar.
I keeping going in and out of the money on my trade in QID- I have been up nicely three times since entering the trade, and down a bit three times as well.

As long as the market remains stuck in this range, I have to assume I own QID a little too high. Therefore, when the next big sell down in the market comes, I will lock in my profits and look to take advantage of this range bound but fairly volatile and trendless market.

Here’s a chart of the QQQQs to give you an idea of whence I speak:

My bet has been the QQQQs are ready for a real correction after the post March two month unabated run up. However, as you can see, QQQQ is just griding in an ever tightenting range. The highs are getting lower, but the lows are getting higher. That’s a trendless market. It is due to break out of that range one way or another in a much bigger way pretty soon. Which was is the big questions.

Therefore, next time QQQQ gets down to the support trendline, I will sell QID and hopefully make a profit. If it goes up to the resistance line, I will buy it. I’m hoping to make some money using this strategy. Remember, QID will trade the opposite of QQQQ.
There are a lot of cross currents in the markets right now, and it’s really tough to call which way it will break.

On the microcap front- some comments for the Merriman PNWIF analyst for your review in a second BLOG, and other wise no significant break outs or break downs to report. Not much excitement right now, but that’s the way it can be sometimes.