I can just feel the tension. All eyes are on the new Treasury Secretary Timothy Geithner.

Here at Trade the Picture, I attempt not to over analyze the analysis. The price action says it all. Below is a weekly chart of the S&P 500 futures. The tale of the tape this week will be one of three theme songs.

1) Breaking Up Is Hard To Do

The market will defy the voting mechanism and rally. This one will be difficult, but not impossible. After all, breaking up is hard to do.

2) Trapped In a Box

Nothing like some old school No Doubt with a few friends and a billiard table.

This is a more likely scenario. This scenario will frustrate the most people. Don’t ever rule it out. The market will continue, As Nicolas Darvas might describe it, to be trapped in a box.

3) Breakdown

Nothing like some classic Tom Petty.

This one will be the easiest. Down is still the path of least resistance.

Breaking down below the green line will take us right to the blue line. If this scenario plays out, my downside insurance will expand in value quickly and seismically.

Peace

Consolidation

There was a girl I used to know
She dealt my love a savage blow
I was so young, too blind to see
But anyway, that’s history
-Split Enz

Bank of America’s (BAC) news isn’t being accepted well by the markets. I wrote about Bank of America back in September. Nothing has changed. They are still making history, and it still rhymes with Dynegy.

Peace

History

Hindsight

VTI is a gauge of the overall US equity market.

Notice how the voting mechanism is working on this run up. The price is moving higher, but the vote, the volume, is weak. That’s the tell on my recent call.

Peace

Look Out Below

Volume

We hope, however, to obtain a real understanding of the problem of exchange by
studying it from an altogether different angle; this is, from the perspective of a
“game of strategy.”
-John von Neumann and Oskar Morgenstern
Theory of Games and Economic Behavior

The theory of games is a theory of decision making. It considers how one should make decisions and, to a lesser extent, how one does make them. You make a number of decisions every day. Some involve deep thought while others are almost automatic.
-Morton D. Davis

I recently flagged the short entry. Discussing this decision with my collaborators at
The Tinker Factory, our conversation veered off to Game Theory. Stay tuned for more announcements regarding Game theory and all of it’s implications.

Peace

The complexity of a decision is minimized if you view things visually, that is, if you Trade the Picture.
-Mr. Volatility

The Reflection

To everything - turn, turn, turn
There is a season - turn, turn, turn

-The Byrds

It is time to go short again.

The market has been inching higher on light volume.  Yesterday’s sell off is an ominous sign.  It is a tell for tomorrow’s economic numbers.  They will not be good.

It is time to ride the next wave lower.  I said I’d let you know when.  It’s time.

Peace