We had been looking for stocks to bounce but instead we back tested support now resistance and have

been falling like a

stone ever since. While the economic news flow has been sub par the market in my opinion is drastically overreacting.
Lower inflation numbers, reasonably good corporate earnings, and a loose monetary policy provides a positive background
for stocks and when the market tires of focusing on sovereign debt issues it will rally. The selloff now is being driven by
computer trading systems that do not consider reasonable valuation for companies but rather feed on momentum. If the
reserve currencies such as the Franc and Yen stop their appreciation and the long bonds start to sell off we will see a
bottom inequities. The analysis is for educational purposes only and not a solicitation to buy or sell any security at any
time. The comments are made in the context of ETF position trading and Forex position trading. Visit my technical
analysis blog for more information at http://www.sealionllc.com
Recession Worries and the Computer is in Charge
Chart #1SPY, SPDR S&P 500
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ated. Visit our website www.sealionllc.com for more ETF technical analysis, Forex technical analysis
and thoughts on ETF position trading and Forex position trading. We maintain a technical analysis
blog and demonstrate ETF expertise and Forex expertise. You can get more information on our part-
ners there as well.
This chart book is for educational purposes only and not a solicitation to buy or sell any security.
08/08/2011 Volume 1, Issue 18
Sea Lion Capital Management LLC
Chart Book
Chart Notes:
Will return to counting trend
moves in a channel when the
market returns to making
channels. Here I have posted
some long term channels and
you can see the uptrend has
been broken today. Will
price find support on the
median line and recapture
the trend or will we head for
the channel support line?
Page 2
Sea Lion Capital Management LLC

Chart #2IWM, iShares Russell 2000
Chart Notes:
Will return to counting trend
moves in a channel when the
market returns to making
channels. Here I have posted
some long term channels and
you can see the uptrend has
broke last week. Will price
find support on the median
line and recapture the trend
or will we head for the chan-
nel support line?
Page 3
Volume 1, Issue 18
Prices are lower and now sit at the median line. A short term bounce is possible but prices will go
lower. Pessimism over the Euro zone will continue to weigh on the pair.
Chart# 3EUR/USD, Eurodollar
Chart Notes:
1. Markets bullish trend broken with
violation of prior swing low.
2. Markets bounces and reverses but
puts in a lower high.
3. Market retests $1.40 low and if it
holds a sideways channel is in place.
4. Prices reverse on support in an
evening star reversal in a show of
strength and the markets wiliness to
be open to risk.
5. Prices have failed to advance the
reversal and are now below the
reversal high. A retest of lower
channel support looks likely.
6. Prices made a dead-cat bounce and
will head lower to range support.
7. Prices have edged higher but are still
below the median line and are poised
to reverse.
8. Prices rallied just short of the prior
high and have begun to possibly
reverse. A reversal would correlate
with a downturn in equities.
9. The Euro strengthens against a weak
dollar and mild concern over the US
debt ceiling crisis. Prices will reverse
shortly.
10. Prices reversed hard today and a new
downtrend has begun.
11. Prices paused in their move down but
this is temporary as the next moves
are lower.
12. Prices finished lower but have not
closed lower than the lows of last
week. A break of the median line will
accelerate the selloff.
13. Watch for a short term bounce at the
median line before prices continue
lower.
14. Prices have returned to the media
line with the focus off the US debt
ceiling and squarely on Ital y and
Spain. Lower Euro will continue.
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