7/16T11:26 Market Observations...

Counter-trend rally in effect:

Equity markets up, Gold down, Oil down, US$ up; we are in the midst of another counter-trend day.

Question: Is this the beginning of a new trend or just noise in the current trend?

Answer: The jury is still out but here is what we know:

There is no buy signal on any of the three major averages yet. Even the 60 min. is not giving a buy signal as the indices are all simply trading at the top of the extremly short term downtrend.

Oil is on the long term up trend line and has not broken down yet, but the battle is raging at this important support line. Inventories were up accross the board in a big way, but this should have been predictable. Last weeks number was effected in the opposite direction due to piplines that were off line. Those lines were restored last week so the oil was flowing back to normal. Also don't forget the idea from GMT that inventory builds can also mean that energy companies are willing to hold oil because they feel the price is going higher.

Gold and Silver are not even close to giving a sell signal on the 60 min. and are trading at the 60 min. exp. MA support line.

The 60 min. charts of the financial shorts seem to be working off oversold conditions. None are giving clear buy signals but all are instead trading up into their respective areas of overhead.

So, the action we need to take is to relax and wait for a clear sign. If we begin to get alligator buy signals then we will need to cover and go long, but if not then this counter trend rally will set up another great chance to add to shorts.