Are we entering a “Danger Zone” right now?
The phrase “Highway to the Danger Zone” (theme song here) became popular due to the movie “Top Gun,” starring Tom Cruise.
I share information with several types of investors…long-term (retirement/401k plans) that don’t move monies often, (which “harvested” at the April highs). Medium term investors, that feel comfortable moving monies once a month/6 weeks and shorter-term investors that are open to adjustments frequently, yet are NOT day traders. I am not interested in day trading!!!
This post would be for the shorter-term audience, that are aggressive and open to “attempting to score on defense!”
The NDX 100 is at the top of its trading range and the VXN has created a falling wedge. During this trading channel, when the NDX is at the top of the range, wedges have formed, followed by lower prices in the NDX.
For any medium-term investors that are long the NDX, stay long and keep the 3% stop in play! For those aggressive short-term investors that are comfortable attempting to score on defense, take the inverse position here (Buy PSQ). Momentum and trends remain a positive so far. This is totally a “Power of the Pattern” play for short-term investors.
If this pattern really forces the NDX lower and changes it momentum, I will follow-up with more suggestions per scoring on defense.
Hedged. Will take more aggressive position towards end of next week, when things will be clearer, with pomo on a pause and holloween nearer and gdp closer.
IS …..
and also September is suppose to be the worst Month of all. Not this year!!
IS…
No doubt we are about to enter the traditional “favorable” time of the year.
Yet think about this…when did the all-time high take place in the 500 index? 10/9/2007. What happend after that? Not a good next one year! I did the “happy 3rd anniversary” post this week, reflecting this issue.
I have more faith in the “Power of the Pattern” than buying, holding and hoping…that a window of time that is “usually” good for investors, will be good to our monies.
Chris,
Do you pay attention to any of the market timing advice such as “sell in May and go away” or the “Halloween effect”? Halloween is coming. Time to buy?
Definitly a different take than:
“Buying the NASDQ 100 break of resistance” on Tuesday, 10/12.
But thanks for being honest and giving us the heads-up.
Whiplash for sure.
Best Regards,
Jeff Brown
I’ve only suggested to score on defense twice, since we bought at the LOWS, the first of September. Both times were for aggressive investors only. Once was the Russell at the top of channel resistance, trade lasted 3 days and resulted in less than a.4% of a loss and todays sugggestion is the same type of pattern.
For Aggressive investors only, at the top of the trend channel…this one might last a very short time as well! As I shared in this post, plenty of positive snowflakes are still falling.
Chris, I just love your stuff!First, I came across your easy to read, actionable charts which are so well explained and easy to read. That I am an ETF guy is perfect for me so I don’t have so much translation to do. Then of course your pictures crack me up. But today,,, ah,,, today. The MUSIC!!! Hang ’em High?!?! I played that with my my twin brother on the piano and made the noises up ourselves, and just when I was ready for a break,,, I fly into ,,, The Danger Zone! Ha Ha Ha Thank you so much,,, great stuff!
(How about those wicks! huh?)
Another way that medium term investors could look at this is as a possible buying opportunity after the dip and reconsolidation – if this happens. Glad I have not bought into the breakout yet.
If Maverick would had a 3% stop, maybe Goose wouldn’t have hit the canopy!