Monday, May 04, 2009

Color commentary

The chart below is once again the Weekly S&P only this time with Fibonacci retracement levels superimposed upon the price chart.


Each bar represents one week of trading. There have been ten bars since the early March low. The past seven, including this week, have been blue, equating to an uptrend. As of today, Monday, the uptrend has just touched the 25% retracement level. Prices can rise further, without endangering my premise that this is a bear market bull trap suckers rally.

The 38% retracement is way up over S&P 1000. So a normal retracement would be expected to run 10% or so higher. But this is not a normal market by any means. I don't expect prices to breach 1000, but even if that happens, it makes no difference as to what will come next. The first red weekly bar will trigger the trade of the year.


A

20 comments:

Anonymous said...

Allan
Would it be reasonable to hold FAZ until then?

Anonymous said...

There you've said it. If I see a red weekly bar and the market goes up the following week, I will be hella mad at you!

Allan said...

Re: FAZ

Yes.

Anonymous said...

really Allan? you think financial stocks will go down? I'll be watching so that I can jump all over you if it doesn't!

Anonymous said...

Allan,
can I ask what period do you use for your XLT, I used 35 that all appeared in RED bar!! thanks!!

DangermouseBuu said...

Hey Alan. What do you think of MCET?

do you see the same wave type pattern as you do with NNVC?

Allan said...

Re: XTL

The color of my bars is based on BW software, which I find to be a better trend following system then the XTL.

Anonymous said...

Re FAZ

I remember another seemingly educated poster mentioned that FAZ is only good for day trading, and not holding for "the trade of the year" - the rationale was something about price decline killing you, and that QID would be better?

Any comments on FAZ vs QID?

Thanks

Anonymous said...

Re: FAZ

You realize that anyone listening to you held on today and experienced a nice stick up their butt.

Allan said...

I thought I told you to get your head out of there.

Anonymous said...

Marc Faber is also calling for the S&P to hit 1000 then pull back. He nailed the early March bottom.
He thinks there WON'T be a huge sell off, maybe 20% to S&P 800 then we move even higher.

dave said...

hi allan, thanks for your site, love your stuff(found you thru market club). i trade futures (but don't have anywhere near your knowledge) so i'm waiting to buy june puts on the e-mini to profit from the 'trade of the year'.
care to say how will you play this one?

regards, dave mc ewen

Allan said...

Dave:

All in SHORT

When the time is right.

Anonymous said...

Allan, i'm kind of sick of this market,why the news keep telling us the recovery has come? as we know we cann't repair the broken economic in one day.and how the financial can recover their huge loses in the short time? with taxpayer money and manipulating the market? unbelievable.but thank you for sharing your knowledge and experiences.really love your site

Allan said...

Good observations, the market going up in face of deteriorating economic conditions will pull in a lot of sidelines money.......which we will pull out and put in our pockets in the months ahead.

Anonymous said...

I am going to order extra pockets for my new pants ...

Anonymous said...

whatever dude. Let's count our chickens after they're hatched. So far, all we got are rotten eggs!

Anonymous said...

Allan, is that you in your younger days in the Red , or is that your partner?

abot said...

FAS AND FAZ came out around $60 each last year. Now both below $10. Those things dissapear money.

abot said...

disappear