Hi Allan, Appreciate your daily updates and teaching on this wedge very much. Is today's drop below and then close back inside of the wedge not short term bullish? Steve
It is a sign the government is holding up the market and the economy. In that they are buying stocks and borrowing and spending.
The P/E ratio is over 20. In bear markets it is usually 15 or less.
Why are prices so high relative to earnings? There is a big buyer who keeps buying whenever the market goes down.
I don't think the government buying is bullish. This unprecidented action is a sign how desparate the situation is.
However, I do think the chances of the market going down a lot are very slim.
As long as the government is being given all this credit at a very low yield, they are going to have the resources to hold the market/ economy up.
Myself, I stopped lending Uncle Sam new money at 4%.
The strategy is to play SPX from the short side, but look to sell resistance. Selling weakness has been a mistake, because the last two months has proven you'll get those positions back in your face.
We've the been consolidating for the past few weeks so the right play has been sell resistance and buy support. Or if you don't like to trade counter-trend, sell resistance and cover your shorts when support holds and wait for the market to make it's way back up to resistance. Which is what seems to be happening here.
SPX 60-min. The 50% retracement of the down move from Mon thru yesterday afternoon is at ~842. The 50sma is at 843. This could provide resistance.
If those fail then the 62% retr is up at 849 and worst case the 200sma is at 855. If we have another down move coming those levels should not be exceeded.
8 comments:
Hi Allan,
Appreciate your daily updates and teaching on this wedge very much.
Is today's drop below and then close back inside of the wedge not short term bullish?
Steve
Steve: I can't believe your talking stocks while the Red Wing game is on. Geez.
As long as I am here, no, its not bullish, it's just not bearish either.
My bad,
I'm just glad my Blackhawks are finally decent again this year.
Steve
do you think it is going to move back to the top of the triangle and trap the bulls ...
Allan:
You've been posting compelling charts of a big, extended down move for MONTHS. But such a move never materialized.
Why is this? Esp. despite daily bad news on every front.
This is a classic sign of a market bottom. The fact that you have been consistently wrong supports this.
Conrad
Conrad,
It is a sign the government is holding up the market and the economy. In that they are buying stocks and borrowing and spending.
The P/E ratio is over 20. In bear markets it is usually 15 or less.
Why are prices so high relative to earnings? There is a big buyer who keeps buying whenever the market goes down.
I don't think the government buying is bullish. This unprecidented action is a sign how desparate the situation is.
However, I do think the chances of the market going down a lot are very slim.
As long as the government is being given all this credit at a very low yield, they are going to have the resources to hold the market/ economy up.
Myself, I stopped lending Uncle Sam new money at 4%.
The strategy is to play SPX from the short side, but look to sell resistance. Selling weakness has been a mistake, because the last two months has proven you'll get those positions back in your face.
Resistance today is at 849 to 852.
Alex
Conrad,
Why do you read this blog when you've disagreed for months? Did you find Allan years ago when he was bullish?
I agree with Alex's strategy. I got stopped out at breakeven overnight but there should be a better place to re-short today.
We've the been consolidating for the past few weeks so the right play has been sell resistance and buy support. Or if you don't like to trade counter-trend, sell resistance and cover your shorts when support holds and wait for the market to make it's way back up to resistance. Which is what seems to be happening here.
SPX 60-min. The 50% retracement of the down move from Mon thru yesterday afternoon is at ~842. The 50sma is at 843. This could provide resistance.
If those fail then the 62% retr is up at 849 and worst case the 200sma is at 855. If we have another down move coming those levels should not be exceeded.
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