Tuesday, July 20, 2010

Looney Bin

I could cut the anxiousness in the posts today with a knife, it felt so thick. I rarely venture into the world of making long term directional predictions, and for a very good reason. This market is highly manipulated and we know that like the back of our hands. But here's what I do know- we remain in a downtrend. I don't care what the various EW bullish counts are out there, I don’t care what rumors are floated to let some big money out the door today trying to front-run the Fed, unless and until we take out the June 21st pivot high, we are making lower lows and lower highs and the charts still have bearish order on the EMAs and SMAs on the longer terms. If we reach the June 21st pivot high, then we need to stand back and reassess, but even that level won’t be a pure signal it’s time to go long. Before we make predictions of new bull rallies, or election rallies or whatever kind of rallies are being floated out there, let’s take a deep breath, pull it together and keep our eyes on the longer time frame charts, not the daily squiggles and bounces. They’re meant to fool the most. Was this not the exact thing we experienced throughout 2009 in reverse? What little I understand about EW, I do know wave 2s are meant to freak out the shorts, and that’s something else to keep in mind too. If your positions are too large and you’re melting down, back them off and trade a little safer during this time. Do not let your emotions guide you, control them and trade your charts. I think I warned a few weeks ago to expect the unexpected for a long while, and at least that’s one prediction I nailed. ;-) We will not go down in a straight line, and I venture to guess we won’t go up in a straight line either. This is backing and filling and backing and filling, since the April top. Do not try to trade for a crash or a mega ramp.

In terms of the time factor alone, take a minute to look at the time ratio between the 2007/2009 slide, the resulting dead cat months long bounce, and then look at the time we've been in this move down. That's all I'm going to say about it. While it's "possible," it's not probable, in my opinion, at least at this juncture. Spend some time with your longer term charts tonight and absorb the larger picture in front of us.

spx_bullish_count spx_three_wave_bear
spx_60_eod_7_19 vxx_eod_7_19

Zig’s T for Tomorrow

zig t wed

Finally, for you free-thinkers, here is an interesting piece published by the Royal Bank of Scotland concerning investing with moon cycles, just recently published. Enjoy! I’ll add more charts in the regular posting section later as the night goes on.

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