I borrowed the word from Lee Adler.

As you can see,  cumulative net money flow is still positive and well above the SPX.  Lee’s chart is “based upon the theory that as cash moves between money market funds and the banking system, there's a relationship between that movement and the movement of stock prices. As you can see, it has correlated well with stock prices over the past couple of years.”

In his latest email newsletter Lee writes as follows:

“It seemed that virtually every market observer expected that event to have a bearish impact. My expectation was that it would not be felt until mid July due to technical factors having to do with the Treasury supply settlement schedule. But over the past month, the indicator shown above began to surge, boosting support for the market just as the Fed was ready to step away.

Hysterical media pundits have been loudly proclaiming that the sky is falling as a result of the approaching US Debtmageddon. The markets, however, are revealing them as the know nothing clowns that they are. In fact, the opposite of their dire predictions has been occurring, with both stocks and bonds remaining resilient. The Treasury market is even rallying today after the uber depressing N'Obama Boner show last night. You gotta laugh.

 The chart above makes clear the reason for this market resiliency. Money has been flooding into the US banking system over the past month. The source is apparently capital flight out of the Eurozone. While I don't track the data at the source of those flows, we know from anecdotal reports that there's been capital flight out of parts of Europe. Other US banking system indicators suggest that this is the source of the surge of cash into US bank accounts. The cash account balances of  US based foreign banks have been surging in recent weeks. So have their trading accounts. Deposits in domestically chartered banks have also surged, but their trading accounts have not. It would appear that that the resiliency in the US equity market has been driven by foreign private buying. The Fed's data shows that foreign central banks have not been a factor. This is coming from the private sector”

For some reason private capital all over the world considers US to be safer than Europe and I suppose they know more than I do. But this is one reason I have not gone short yet.

But I am not blindly long and I may switch sides all of a sudden inter-day and shout “let’s get out”. Follow me on Twitter to get my latest calls.

Once again, make no mistake; these are all part of forming the top. But we do not want to go short when the market is still going up. That is not smart. I talked about 27^th July before and we are almost there. For me the most crucial dates  are between 27^th of July to 5^th of  August. And I willl be watching the market activities closely to see if my calls are still valid. You see, I do not mind bring wrong, but I do not want to be wrong for a long time.

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I have had Petrobras on my radar for a while and it was looking more and more interesting the past couple of weeks.  I know PBR's warts include that it was previously a hedge-fund darling, it has the Brazilian Gov't as its defacto CEO and that it is doing some major league elephant hunting in deep water oil plays (billions of $ to drill).

All that said, I need to take the charts at their face value and to me they are telling me to start a swing trade.  I did so this morning at yesterday's HOD $34.56.  I'm going to keep it small so I can keep it at the front of my brain and add to this trade when it shows me that it is working (i.e., takes out important levels).

Weekly Chart:

Weekly charts are always important to review for swing trade candidates … PBR shows a major trend line providing resistance from the 2008 highs where it was at its zenith as a hedge fund darling.

The first test will be to see if PBR can get back up to that level of $36.00ish over the next couple of weeks.  Notice the last time it tested the line back in early 2011 … breaks are often retested.  In that case the break failed and then it performed as it should, it went to the opposite side of the price pattern.  The positive thing from that move is that it didn't seem like it wanted to break-out lower.  When this happens, the subsequent test of the upper trend line can often occur WITHOUT a retest of the new break level (just keep your mind open to a clean break).

Daily Chart:

The daily chart is telling me that traders should start a swing trade position NOW … we have a nice possible reversal pattern taking place:

• Momentum divergence … momentum made a higher low (point 2 vs point 1) while price was making a lower low ($31.55 vs $32.61)
• a clean break of a significant trend line (3-month daily trend line)
• a successful retest of the low price of this trend … higher low ($32.11 vs $31.55)
• 3rd-Push of the 3-Push Pattern made on the successful retest
• Swing high of trend line break is taken out ($34.25) on a strong price thrust higher (i.e., "kick-off" move)

Price is nearing the next significant swing high level of $35.08 … getting above this level and "accepting" it will trigger me to add to my swing trade.

15-Minute Chart:

The 15-minute chart shows more clearly the "kick-off" thrust that PBR had when it moved/reversed off its lows.  A nice consolidation pattern (rectangle) confirmed the direction of the move when it broke through the high

All-in-all PBR has all the things I like to see in a potential swing trade …. obviously all trades can have heat and/or fail, but to me this has good potential. Cheers … Leaf_West