Pre-Market:

Today looks up, as the SPX turned a white candlestick on Friday, fooling my forecast for a bearish day. The candlesticks forecast on 11/12/09 close was bearish, but we finished up for the day Friday. Today the forecast is bullish with a 50 count bullish engulfing patterns to 18 bearish engulfing patterns ratio.

The McClellan Oscillators were also tricked on 11/12 as they were showing a bearish zero line crossover, suggesting further downside. Today they are positively showing a positive zero line crossover.

If the SPX does turn up today as I expect, then a near term target of 1107 is in sight.

Further evidence of a positive weekly start is in the futures, as futures and world indices are up across the board. In overnight news, Japan posted better than expected GDP results.

Today we have retail sales (which are expected to be positive on the Clunker Program) and business inventories for our economic releases, and Ben Bernanke speaking at noon Eastern (Ben never disappoints).

But today could be a very interesting day, as Obama is in China, and China has made it very clear that they have no desire for a weak dollar. Will Ben say or imply something that may signal an intention to strengthen the dollar? How would the market react to this, as a weak dollar has historically positively impacted the US market?

My take on the US market is that it is struggling its best to maintain positive direction, but it is tired and topped. I think we may continue this sideways action for an extended period of time. The lack of volume is worrisome. I may be wrong, but I will not go long into any US stocks until I see more conviction in the market direction.

My portfolio is thriving on my emerging markets choices, while the trading portfolio (primarily domestic equities) is down a bit. On Friday I bought BEST at $1.60 (I had put in a limit buy) thinking I had a steal on my hands, but learned that the large sell-off on Friday was due to a very ugly 10K report that was released on Friday. I’ll watch closely today to see if Friday’s action was an overreaction. If the stock continues to sell off this morning, I’ll sell it and take a small loss.

After my missed Bullish/Bearish Candle forecast on Friday, I decided to benchmark it. I took the past 43 trading sessions for the S&P 500 and tallied the correct forecasts of the next day’s S&P500 close (29 correct forecasts) as a percentage of the total trading sessions (43 sessions) for an accuracy rate of 67.4%.  This is not bad – as an indicator, it  says that 67.4% of the time, if the indicator is bullish, the market will close up the following day, and it if it is bearish, there is a 67.4% probability that the market will close down the following  day. This is very helpful to me in deciding whether or not to enter into a trade.

This week I am paper trading E-mini futures, which appeal to me as a good day trading alternative to equities. If it looks like I can effectively trade these, then I’ll open an account and start day trading E-mini futures.