SDS-SSO Model Update - July 16, 2009

Dear Blogger, thank you! again for subscribing to the S&P 500 long/short ETF Model and welcome to new members who just joined and new list subscribers. today's analysis is available for download: SDS-vs-SSO-20090716-subscriber.xls.zip - (or feel free to browse the directory.) ignore the missing data error message that may pop-up when opening up the file. Excel for Windows looks for metadata that Excel for Mac doesn't generate. if you ever misplace your login, send me a message using the email you originally provided when subscribing through paypal. visit the blog for an archive of all subscriber updates and alerts. the archive is search-able and comments can be posted by everybody. Today's Commentary the S&P 500 index ran flat from the open to about 1:30 PM EST and continued it's rapid pace upward. at the EOD, model data reflected this movement by continuing the mild bullish bias started yesterday. geodesic coordinates are moving toward the tail of the path in a fairly orderly fashion. data coordinates plotted in the diff-theta vs diff-c scatter plot established it's second point in this new series of data in the 4th quadrant. yesterday i expressed some concern with that, but this is actually consistent with the motion illustrated in the geodesic plot. as the index advances, the amplitude of vector-c increase while the angle is decreasing in this part of the cycle. i'll have to break this behavior down further in special commentary all it's own. expect the S&P 500 index to advance again tomorrow. how long this advance continues is not known. however, look at the chart of the amplitude of vector-c. looks like a right shoulder emerging, doesn't it? not exactly symmetrical, but that's what it looks like. this indicates to me we're going against a larger overall trend. this could potentially persist for a while. but it's just putting the inevitable further down the road. at the same time, this could be a reflection of a much larger run up in the index than anticipated. we'll see. for now, it's probably safe for a while to be biased to SSO in your pairs trade. safety also precludes keeping a reasonable amount of cash on the side lines. around 1/3 of the overall holding is probably a good number at this point in the cycle. if the advance continues to explode, it's reasonable to say a lower percentage of cash is natural. of course that decision is always yours to make. best regards, mike james Managing Member Equity Informatics, LLC phone:302-220-3864