Our focus over the last two weeks has been the persistent weakness of economic numbers and

the markets conclusion that

a rebound in the second half may not be coming. This newsletter has been calling for a near term bounce and today looks
like the start. Stocks are ready to bounce not because of great optimism but rather because the short term pessimism is
excessive. 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 wants to rally. Although the hori-
zontal support in the chart has been overrun it is not unusual for the market to exaggerate a move when politics interfere.
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 in-
formation at http://www.sealionllc.com I continue to post more charts and commentary on www.sealionllc.com
Too much pessimismhas it run its course?
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
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This chart book is for educational purposes only and not a solicitation to buy or sell any security.
08/03/2011 Volume 1, Issue 17
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 consolidation 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 tempo-
rary noisy overshoot.
10. Prices have no violated the channel
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 channel 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.
16. Prices reached channel bottom and have
bounced. The hammer bottom should
hold and prices should rise from here.
17. Prices are gyrating sideways and forming a
base from which they can bounce. The
bounce may be short lived.
18. Prices overshot channel and horizontal
support but another hammer should
start the rally back across the channel.
Page 2
Sea Lion Capital Management LLC
Prices have bounced with a hammer bottom and moved higher. This will serve as the near term
low and prices should recapture positive momentum. The political concerns have distorted the mar-
ket in the short term mving prices beyond chart support. With attention on the sovereign debt issue
diminishing attention will return to micro issues such as earnings performance and an accommoda-
tive federal reserve.
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 support 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 portion of the
channel.
16. Having found the bottom of the
channel and bounced with a
hammer prices should rise from here
in the near term.
17. Prices are bouncing around support
and forming the base necessary to
move higher.
18. Prices put in another hammer ad tiis
one should stick and prices should
move higher from here
Chart #2IWM, iShares Russell 2000
Page 3
Volume 1, Issue 17
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.
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