The selling gained momentum today as concern over the over the debt deal worsens.

The window of opportunity to solve

the problem shrinks with each day but in reality I believe most of the market doesnt take the threat seriously. The mar-
ket is more concerned about the slowing economy and the risk of a double-dip recession. Instead of focusing on how a
credit downgrade will hurt the US economy the concern is how a weak economy will react to a credit downgrade. Even
with a debt ceiling increase the US will need to make drastic policy change to avoid a downgrade before years end. As a
result we have to believe that the market action is more about stocks than about the debt ceiling and that sentiment in
this market right now is deteriorating because the economy looks soft. Earnings so far have been good but not stellar.
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
Stocks Running out of Patience
Chart #1SPY, SPDR S&P 500
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This chart book is for educational purposes only and not a solicitation to buy or sell any security.
07/27/2011 Volume 1, Issue 14
Sea Lion Capital Management LLC
Chart Book
Chart Notes
3. Possible lower high with shooting
star candle
4. Prices are now above the median
line of the bullish channel and
have found short-term resistance.
5. Prices rally through resistance and
out of the channel. A consolida-
tion will be required before the
next move up.
6. No consolidation yet as prices are
rising along channel resistance.
7. Prices retreat to prior resistance
now support for consolidation
8. Prices testing lower channel
support and need to reverse
quickly to maintain the rally
9. Prices could be back testing
setting up a move lower but more
likely the channel needs to be
redrawn or this is a temporary
noisy overshoot.
10. Prices have no violated the chan-
nel support and are trying a back
test. The back looks weak in
nature.
11. Prices have broken through the
channel and head lower gyrating
around their median line.
12. Prices have exceeded their chan-
nel but consolidated and stopped
under prior channel support. This
bull trap will reverse shortly.
13. Prices under old support line from
prior channel and at resistance of
redrawn channel.
14. With resistance tested and in place
prices have moved lower and begin
their move to the bottom of the
channel.
15. Prices move aggressively half way
across the channel and are driving
toward channel bottom.
Page 2
Sea Lion Capital Management LLC
Prices have reversed and are moving aggressively to channel bottom. Price may move beyond chan-
nel bottom, back test, and move lower. Prices could fall to prior support in the $77 area before a
bounce occurs.
Chart Notes:
3. Possible change in trend needs
confirmation with a new high.
4. Prices are now in the upper half
of the bullish channel and have
more room to run.
5. Prices have continued up and
no extend beyond the channel.
Prices will need to consolidate
before the next leg higher.
6. Prices rising along resistance.
7. A return to former resistance
now turned support. A mild
consolidation has begun.
8. Testing the median line. Price
often finds support here.
9. Prices found support at the
median line and are poised to
move higher.
10. Prices are holding their channel
support and a bounce may
occur.
11. Prices have broken channel
support and are falling around
the median line.
12. Price have stopped at channel
resistance but need to reverse
to maintain the downtrend
channel.
13. Prices at the apex of old sup-
port now resistance and the
current channel resistance.
Prices will reverse soon.
14. Prices failed to hold their
afternoon rally and are now
moving lower.
15. Prices gapped lower and may
now challenge the lower por-
tion of the channel.
Chart #2IWM, iShares Russell 2000
Page 3
Volume 1, Issue 14
Prices reversed had at resistance and headed lower today.
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 re-
verse.
8. Prices rallied just short of the
prior high and have begun to
possibly reverse. A reversal
would correlate with a down-
turn in equities.
9. The Euro strengthens against
a weak dollar and mild con-
cern over the US debt ceiling
crisis. Prices will reverse
shortly.
10. Prices reversed hard today
and a new downtrend has
begun.
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