CNBC cites four reasons why the stock market has had the best September rally in 70 years (see article).
We have participated in 100% of this rally! Anyone disappointed that the article didn’t mention any of the reasons we cited that it should happen, BEFORE the rally took place? I cited in this article (see post) that the Euro/Yen has been a great indicator for the stock market and it was suggesting a good short-term rally in stocks and that the rally would surprise the majority of investors. Or that numerous “downside bullish wicks had taken place at support!” (see post) Disappointed that they left out the quality technical reasons to buy stocks, yes. Surprised NO!
Now the key becomes, how much of the rally can we keep if the worm turns. Right before the close yesterday (see post) for those willing to score on defense, we suggested to purchase the inverse Russell 2000, due to this poor single day action at the top of the trading range. Below is a more detailed look at the Russell.
Game Plan…Own the Inverse Russell 2000 ETF, with a 2% stop above the top of the trading range! Why the Russell Index? When compared to the S&P 500 and Nasdaq, only one of the three that is at the top of its trading range! This idea is for aggressive investors!
Rick,
Sorry for any confusion…yesterday when I suggested to score on defense the russell was at the VERY TOP of the channel…adding 2% would require a 2% breakout of the channel before being stopped out.
Hope this helps.
RWM having a decent first day, yet one day doesn’t make a trend.
Hi Chris,
Mass confusion (me stupid).
The “2% stop above the top of the trading Range!” translates to….. the resistance line on the chart?
I will follow up on the 500 wb…you one smart cookie!!!
500 hitting the 1/19 high and turing tail for sure has my attention, that is why I was willing to post the comment to Scott. Was attempting to give a heads to everyone, as well as adding the info on the dollar and euro/yen
Appreciate your viewership WB and am honored that you have shared the blog with friends.
Chris
Hi Chris
I am short both the s&p500 and the Russell2k. Established the positions a little earlier than I would have liked (and if I had been listening to you instead!). Given that the indices seem to move in the same pattern does the action on the Russell suggest the position in the s&p500 is appropriate now? In general wondering when the trend change can be confirmed in terms of price level on the charts? I was on the verge of closing my short positions and starting over with a clean slate (and basing future investments on your recommendations) but it appears I should hold and see at this point. Thanks for your straightforward approach.
“Does the inverse russell post suggest anything?”
Is this Chris Kimble codespeak for harvest S&P 500 gains? 🙂
wb
Really appreciate the deceptive simplicity, and, thus, the clarity of your work, and have recommended your blog to several friends.
Scott,
dollar is testing support at the lows reached, in April and August.
Euro/yen at the same time is struggling with overhead resistance,creating an interesting single day pattern, all at the same time the 500 index yesterday, HIT THE HIGHS REACHED on 1/19!!!
Hmmm…Does the inverse russell post suggest anything?
Hi, Chris: dollar off (again) – this time below historical support at $80. Time to bail or pile in? Thanks!
I don’t plan on using too much tighter of a stop than 2%.
Some people have to buy the Russell and some use ETF’s. As with the two charts I am tracking both.
Outstanding comment per “charts say what they say, not what we may want them to say!” We buy and sell price…so why not focus on tools that are price based!
Appreciate the good questions and comments!
Hey Chris,
thanks for the nudge…hard to be short ahead of Fed POMO’s and the like but a good play for now. Any thoughts on a downside target when stops would be tightened up? Also, your 2% stop is based on the RUT index or tracking ETF?
Thanks again for your unbiased opinions (ie, charts say what they say, not what we may want them to say).
If that is true, many might have looked this way over the past month.
the picture above must be of a short seller. Great charts, thanks again!