The monthly and daily signals are now in agreement that the indexes should be sold.  Note the -5 indicator in the Russell in the daily bar chart.

There may be another reason to expect a down move on Monday.  Anyone watching CNBC late in the trading session might have noticed an especially smug take on the market action among the anchors.  When the Dow pared its losses, (over 100 points at the worst) by more than half, the mood on the set was positively giddy.  This was before the final ease-off toward a close not all that far off the lows.  The particular focus was on how the market was again shrugging off the unprecedented stratospheric oil prices.  The September light crude contract closed just off its $67.10 high.  It was almost like, “Nyah nyah, even an oil explosion can't rain on our parade.”

Markets can be stubborn at extreme levels, as anyone fighting the bubble of 1999-2000 will remember.  Sooner or later though, reality does triumph.  Despite the pundit spin that oil isn't that bad when adjusted for inflation, or for whatever reasons they were raising their imaginary champagne glasses, today's gas prices are a very tangible consumer tax.  We all feel it every time we fill up, or our spouse fills up, or our kid holds a hand out after going over budget during a road trip. 

We'll continue to be both long and short as the technicals dictate, but there is no convincing us that in a macro-sense, high oil is not a negative for the market.  Again, the chickens may take a while to come home to roost, but several trading associates had the same observation about the strange CNBC high-five-a-thon:  “They're just asking for it.”

Dynamic Monthly Biases for August 15

Flip from long to short in the Nasdaq.  Hold shorts in S&P and Russell.

The bottom two rows determine the signal.  Dynamic Day One trumps everything�"you always follow it.  When it's neutral, the Monthly Perpetual provides the direction.  Click here for a more in-depth explanation of the rules.

Daily CzarChart for August 15

The bottom row provides the direction of the bias at the open: long (L) or short (S).  When it's neutral, it will read zero (0).  Click here for a more in-depth explanation of the rules.

DISCLAIMER: It should not be assumed that the methods, techniques, or indicators presented on in this column will be profitable or that they will not result in losses. Past results are not necessarily indicative of future results. Examples presented on this column are for educational purposes only. These set-ups are not solicitations of any order to buy or sell. The author, Tiger Shark Publishing LLC, and all affiliates assume no responsibility for your trading results. There is a high degree of risk in trading.

Art Collins is the author of Market Beaters, a collection of interviews with renowned mechanical traders. He is currently working on a second volume. E-mail Art at artcollins@ameritech.net.