SevenSentinels.com

Primary Trend: Up ~ Intermediate Term ~Seven Sentinels~ SELL MODE, 20% TZA, 80% Cash

First and foremost, markets finally gave us an Intermediate Term Signal, and did so in a spectacularly decisive manner. August 2, 2011 marked our fourth Seven Sentinels Sell Signal of 2011 and we began to short today as it became clear that this signal was a certainty for today's close.

This morning's pre open intra-day article was entitled "Decisive Market Action Immediately Ahead", and as it turned out today's action, though frustratingly late off the recent top, was one of the single most decisive days we've seen in this entire Primary Cycle, as not only are all Seven Sentinels very decisively in sell territory, leaving absolutely no doubt as to the Intermediate Term Trend being now DOWN, but a whole host of individual market internal and external measures all set decisive 2011 new lows. Among them:

BPCOMPQ:

NYMO:

TICK 19 and 39-day ema's:

10-year TSY yeilds:

20-year TSY bond rates {via inverse pricing}:

SPX (closing basis):

RUT:

$SOX:

Today's action was indeed decisive in terms of setting forth the line of least resistance for markets ahead. As we'd detailed earlier in today's intra-day comments, since this signal came much later than prior sell signals vis-a-vis the most recent top, on the seventh consecutive down day off of the recent 1346 SPX high, this presented certain challenges for us. Once we got the signal, the near term position of the market made it difficult to put out our entire line at prices with which we could be comfortable, because markets by then had come off 60-70 SPX points already in just 7 sessions and were getting oversold and ready for a "bounce" of some sort... perhaps a sharp scary one. Experience tells us that these bounces in sharply declining IT Trends can often be vicious and frightening, and to get caught 100% short on a 200 point DJ advance, for example, would be just too uncomfortable for any of us - should that happen. And we have absolutely experienced counter trend moves of that magnitude and more in past declines.

So we settled in upon the strategy of putting out 20% of our position late today, with the intention of shorting into bounces ahead. And so we shall. We'll report in real time just as quickly as we possibly can, every trade we take now for the tracking account, as we did today when we bought 10% TZA at 2:15 and another 10% at 3 PM. The percentage figures refer to what percentage of our entire account was positioned into that stock. We hold 20% TZA which is about 9700 shares and 80% cash which is about $1,550,000 at the close today, for total value of $1,956,176.98, up 95% from where we began in June, 2010.

The trend is clear. Our mission is clear. Now our job is to navigate the short term vicissitudes of the market as gracefully as possible over coming days, so as to put in place and hold our line of inverse ETF's for the IT downtrend ahead. We expect some sharp and intimidating rallies along the way, and may be due for the first of those very shortly, perhaps tomorrow. So now we buckle up and get to work.

EOM