Investment risks will likely rise higher this month.

Market Outlook

Longer term:
Cash is now slowly draining out of the market even as it continues to rise. It appears to be in a quarterly topping phase yet the uncertainty of the Xmas season should protect the market until investors decide at the end of December if consumers are finally re-engaging and becoming more optimistic. If consumers are re-engaging even with the expected high unemployment figures, then the market consolidation could end early in January and the cyclical bull market will likely resume. If sales remain low while unemployment levels are peaking, then we expect a sharp selloff in early January and sideways movement for six to nine months before the cyclical bull market resumes.

Shorter term:
Stronger stocks should rally over the next few weeks and stocks with poor earnings will no longer be good even for speculation but will become poison. Many of Jim Cramer's recommended wireless revolution stocks and speculative pharma and health care stocks will likely tank just as the solar energy stocks tanked this past month. Strength is in, and weakness and doubt are out. We expect to be taking profits and put cash on the sidelines for at least a month. Even if the socialists pass nationalized health care this year we expect the socialists to be thrown out of office before the plan goes into effect.

Today,
The Group of 20 nations agreed to maintain stimulus efforts and metals prices rallied.

This week,
Monday, Nov 9
FED releases quarterly loan officer survey results.

Tuesday, Nov 10
October small business optimism index

Wednesday, Nov 11
Veterans Day

Thursday, Nov 12:
Unemployment Claims for last week
FED reveals monthly budget deficit

Friday, Nov. 13:
U.S. Trade Gap, import prices expected to rise.
Consumer Sentiment expected to improve

Market forces November 9
The market rally is under way but if a new high is not established that is at least 1% higher than the last one, then we expect a few months of declines will follow. We are prepared to diversify out of stocks or into fixed rates and cash as the market rallies.

Asian markets were higher last night; China up 0.4%, Hong Kong up 1.7%,
India up 2.1%, Japan up 0.2%, Seoul up 0.3%and Taiwan up 1%.

European markets are up sharply with the average in a range from 1.6% to 1.8% this morning about half way through their day.

US pre-market futures are up 0.2% today at 8:00 AM EST with the DOW above 10,000 again. The U.S. stock-index futures advance indicates the market may rise for a sixth day.

This new market will be treacherous for weak stocks that had advanced sharply with previous optimism. Now those weak stock could drop very sharply if they do not improve. It is important to get out of weak stocks quickly and possibly all stocks within two weeks when this rally should be topping out.

Our indicators say we are near the top of the market for perhaps the next six months. That is to say we expect that although the averages may not show it, our cash flow index indicates that cash has been leaving the market for almost two months and that puts a spin on things. For instance, even if we slightly exceed the markets previous high of the last month it will still be a head and shoulders sell formation for us. The market now has to surpass the previous high by about 1% (at this time and still increasing) to maintain a bull market. For that reason we will be prepared to go into cash gradually now by just taking profits and not re-investing in the market over the next three weeks and by then we will know if this rally still has legs.