Testing times .....

The next couple of days sets the tone for Q4 and talking straight the BULLS are odds on favorites:

1. There will be major political giftes given before November midterm election

2. Fed and all of the "establishment" has gone ALL IN on upside to the economy....There are NO LIMITS to what they will do to secure higher asset prices and in the process hoping to restart the job creation process. (@ 3 pc growth rate!)

3. Technical picture is strong and getting stronger..ANY model you would use have buy signals now, yesterday, and a few weeks ago..

 4. Market "seems" underowned" - not the story I get using my models, but the general talk of the market.

On the other hand - why aren't the S&P already at 1200+ ?   Do not forget September 21st, the FOMC told the market: You now have not only low rates, but also a guarantee of forever lows rates AND you will get free put option - despite this we have ONLY moved from 1140-ish in the cash S&P to 1150-ish ? Maybe the next few days will confirm the signals as they are read by the markets -  but sitting tight a few more days would not hurt.... Two days stop above 1153.50 in December futures.

Gold - probably seriously underowned - is in the focus  - I took my last position off yesterday - only to miss a quick 32 figures today!  Well - my models got GLD & GOLD over-over-over-bought... so for good orders sake  I needed to reduce. I am also reducing all other positons being ---- slightly lost, in the sense I accept/understand why market would/should go higher, but I have hard time getting this to fit into a world of forever high European debt spreads and a CURRENCY WAR which is getting worse and worse. Brazil and Chile both stepped up their weakning of their respective currencies overnight, if this continues, Euro will be back at 1.50+ this side of November - hardly what Europe needs - but likewise no other countries want stronger currencies - so should we ALL devalue at the same time......?

Time is ripe for some serious change, but it will not happen - not in the US mid-term and not in the financial markets - things are in the "sweet spot" - not too bad, no too good, hence the odds on favorite is: Higher - the final leg into 1230-1250 - however I will watch from the sideline for now - only playing intraday plays.

Winston