I have learned to use volatility bands derived at 5% intervals away from the 150-day moving average. Take a look at how the Dow has been trading the last 12 days (Black Box) and you can see why. Look at how the trading has been bound between the -20% Band (Red Line) and the -30% band (Green Line), with the -25% Band (Blue Line) as the pivot.
I don’t invent any of this stuff. I just study a lot and learn what big money uses in determining how and when they deploy money or sell holdings.
Here is the NASDAQ 100 Index. See how it has tagged the -35% Band three times in the past 9 trading days (Black Arrows). This pattern is referred to as the “Charlie’s Angels” or a “Triple Bottom” (geek humor at it’s finest!). There is no such thing as a “Quadruple Bottom”, so the 1,175 level had better hold, or the next leg down will have begun.
The blue arrows are supposed to show today’s low of 1,177.17 versus the -35% Band at 1,178.51, but I cropped the picture poorly.
The S&P 500 Index ($SPX) and the Retail Sector (RTH) have similar charts.
All I can tell you is that these recent lows had better hold! We’ll see. If the lows fail, then there will be ample opportunity to make big piles of money in a short period of time. If the lows hold, then there may be a chance to make some decent coin of a reversion back to the 50-day average (currently 10,589 for the Dow Jones and 1,154 for the S&P 500).
A break above the trend line for RTH may set up a decent rally.
I’m going to do a lot of homework this weekend and see where good entry points are and if big money shows up to buy this market in the next few days, I will have stop buy orders in place to participate with them.
If big money starts to sell the markets hard again and takes out the recent lows, I will have stop buy orders in on the short ETFs and participate with them in the ensuing bloodbath.
I don’t care which way the markets go. I just want to be invested in the direction of the primary trend. I have ample resources to be invested Long or Short in very efficient vehicles. So I don’t care if the markets are rallying or crashing, because I can make money either way. This skill has allowed me to miss most of the pain of the last 14 months.
At some point, the markets will bottom and a new Bull Market will commence. I’m not smart enough to guess at what price the markets will bottom. I assume that the Dow and the S&P will undercut the lows of the 2000-2003 Bear Market, just to scare the heck out of people. But I will let the markets tell me when it is again time to get fully invested.
Remember, bottoming will be a process of 6 to 12 months. Leadership will show up and I have the skill to identify it when it does. Right now, there are 2 potential leading stocks in the Universe of 6,000 that trade decent volume. It will take months for new leadership to start showing up. I’ll keep you posted.
I don’t invent any of this stuff. I just study a lot and learn what big money uses in determining how and when they deploy money or sell holdings.
Here is the NASDAQ 100 Index. See how it has tagged the -35% Band three times in the past 9 trading days (Black Arrows). This pattern is referred to as the “Charlie’s Angels” or a “Triple Bottom” (geek humor at it’s finest!). There is no such thing as a “Quadruple Bottom”, so the 1,175 level had better hold, or the next leg down will have begun.The blue arrows are supposed to show today’s low of 1,177.17 versus the -35% Band at 1,178.51, but I cropped the picture poorly.
The S&P 500 Index ($SPX) and the Retail Sector (RTH) have similar charts.
All I can tell you is that these recent lows had better hold! We’ll see. If the lows fail, then there will be ample opportunity to make big piles of money in a short period of time. If the lows hold, then there may be a chance to make some decent coin of a reversion back to the 50-day average (currently 10,589 for the Dow Jones and 1,154 for the S&P 500).
A break above the trend line for RTH may set up a decent rally.
I’m going to do a lot of homework this weekend and see where good entry points are and if big money shows up to buy this market in the next few days, I will have stop buy orders in place to participate with them.
If big money starts to sell the markets hard again and takes out the recent lows, I will have stop buy orders in on the short ETFs and participate with them in the ensuing bloodbath.
I don’t care which way the markets go. I just want to be invested in the direction of the primary trend. I have ample resources to be invested Long or Short in very efficient vehicles. So I don’t care if the markets are rallying or crashing, because I can make money either way. This skill has allowed me to miss most of the pain of the last 14 months.
At some point, the markets will bottom and a new Bull Market will commence. I’m not smart enough to guess at what price the markets will bottom. I assume that the Dow and the S&P will undercut the lows of the 2000-2003 Bear Market, just to scare the heck out of people. But I will let the markets tell me when it is again time to get fully invested.
Remember, bottoming will be a process of 6 to 12 months. Leadership will show up and I have the skill to identify it when it does. Right now, there are 2 potential leading stocks in the Universe of 6,000 that trade decent volume. It will take months for new leadership to start showing up. I’ll keep you posted.
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