2/19/2007 12:10:04 PM

Dynamic Trading is switched back into SELL MODE on Friday, after it became clear the Bernanke Bounce had probably run its course.

Last week also brought bad news for housing, with starts sinking 14.3% in January, despite the warm weather - a 10 year low. This all ties in to consumer confidence and consumer spending, which is about 70% of GDP.

Bottom line: The markets are now, again, looking tired and ready to roll over on any negative catalyst.

In the upcoming week, we could see some real pressure on the markets if the Bank of Japan bumps rates or even just talks hawkishly -- as this could pressure many to unwind their "yen-carry trade" positions. The Yen-carry has been fueling much of the global liquidity that has kept this market artificially afloat.

Although the one year chart I've attached of the major indexes still could be interpreted by some as neutral or even mildly bullish, the forces that could pressure a sell-off are mounting behind the scenes.

Note how the simple trend lines, initiated last July, have been breached to the downside ever since November/December, most dramatically in the NASDAQ (magenta line). Momentum has clearly been weakening and we could flip over and move the other direction at any time.

As always, please email me with any questions, suggestions or comments: dynamictrading@stockbarometer.com.