Flirting with Disaster? Wouldn’t go that far. Flirting with ole Uncle Fibonacci? For sure!!!
Euro and the Dow are flirting with the 61% retracement levels, with “bullish sentiment” at very high levels. Makes one glad to have harvested a few positions of late? Anything can happen, yet glad to step aside and see if the markets can break resistance.
Luke,
I do look at candlesticks daily. Yes long upside wicks all over the place yesterday.
Look at the wick that TUR created yesterday…
I attempt, don’t always succeed, to keep charts farily clean. I turn candlesticks and high/low/close into lines to cut down on some of the noise, yet for sure believe in them and use them all the time.
Appreciate you viewership, kind words and thoughts.
All the best,
Chris
Hi Chris, wonderful blog and insights, thank you for sharing all of this with us. I would like to know if you ever look at candlestick charts, with short timeframes, to have a feeling of investor’s psychology. For example, yesterday’s action on the S&P500 (thursday oct 21) created a very long legged doji, the like of which we haven’t seen since early July (on the S&P at least), and that was just before a spectacular reversal took place. Does candlestick chart analysis help when studing mid to long-term patterns, or does one exclude the other? Thank you so very much for disseminating the fruit of your experience in such a fun and yet effective way.
Luke
CK…That is a great one! Well said!!!
Junk bonds represent weak/not as strong of companies in America. In the past, when these companies started gtting priced for weakness, the economy was heading for a slow down!
. . . . so it will be time to short when “stocks in drag” become a “drag on stocks”!
Hey Prophetfinder…Thanks for this comment. Excellent!
Per when do you take an “opposite position?” Fib resistance in the Dow and Euro led me to harvesting of late. Per going the opposite direction/attempting to score on defense, I plan on ramping up those positions if we see more cracks in price/patterns.
One of my favorite indicators for the past 12 years is high yield bonds…I look at them as “stocks in drag!” If and when this area starts to reflect weakness, the price/pattern message will be to take action at that time. Right now what is the message from high yields? Does new highs for the year say anything?
If the dollar does hold on support and rallies, the impact most often is lower stock and commodity prices. If this happens, basic material stocks will really be put under pressure. On my price/pattern radar screen I am watching for a breakdown in FCX and IYM… if this happens, the inverse basic materials ETF should be owned!
If the Dow and 500 index break Fibonacci resistance, I will follow. Many seem to have a challenge with the so-called “disconnect” between market prices and fundamental news. I want to remain “connected to price and make money from it.” I don’t want to be right, I just want to help people like you inflate the value of their portfolios.
By the time this economy looks good, where will price be? Markets don’t reward comfort, they reward “discomfort!”
Appreciate your viewership and comments,
Chris
tia,
P.S. for what it is worth, I did read (ETFGuide’s technical analysis) that 1159 is a critical support level – that is where the S&P500 bounced off of on Tuesday.
tia,
great question. I keep wondering when what is predicted by the CMI (and ECRI) index will manifest itself. there was a pretty big move down on tuesday, but it seems to have been a headfake. There seems to be a short-term “battle” between a stock market that is overbought, overbullish and overvalued and at resistance that would favor lower stock prices vs. the effects of QE (liquidity injection per treasury purchses and associated dollar devaluation)that tends to push stock prices up.
Have you read John Hussman’s weekly market commentary (hussmanfunds.com)? I find his analysis very insightful in terms of the big picture and where we may be headed. One of the only things I read regularly along with this blog and dshort – prevent information overload.
In any case, being long without protective stops seems like it could be disastrous. But at what point will things reverse, who knows? Could be any day. Perhaps just after the election and fed mtg in early November? Or maybe the stocks will become ridiculously overvalued? That’s one thing I like about this site is that you can invest relatively safely (protective stops)without having to guess.
Anyway – just my thoughts and probably not worth that much given that I am a geologist!
cK
Hey Chris,
I have been keeping a close eye on both your blog, and dshort blog. I keep coming back to the striking correlation between the Consumer metrics institute (CMI) and the S&P 500 performance.
But then when you compare the CMI to your techncal analysis with the Dow, S&P, and see that there is strong resistance for a move higher, even when there is a high bullish sentiment, I am very tempted to become vested in a S&P or Dow Short ETF.
My Question is this, At what point do you take an opposite position if it seems its not breaking through resistance? I assume there needs to be confirmation, but what % drop would that be?
tia,
Prophetfinder
MisterEngard,
Interesting link. The idea of investing in commodities became widespread just about the time of that divergence. There was a piece in FT Alphaville the other day about new ETFs that will hold claims on physical commodities, in the same way GLD holds gold in vaults. When people are paying to store copper in warehouses, there will be no question of speculation influencing prices. Actually, it seems there’s a lot of that going on in China right now.
Hi Chris,
I think that again yuou are in the rigth side, it semms that copper is going down.
http://www.tradersnarrative.com/copper-loses-its-phd-moniker-is-set-for-a-stumble-4912.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+TradersNarrative+(Trader%27s+Narrative)
Greetings, and please keep on publishing, in spain several people follows you.
Makes sense!
Notice what the hot ETF TUR did today…longest upside wick I could find in at least a year! Commodities and Emerging markets didn’t bounce much yesterday, considering how much the Dollar fell.
Maybe I should go outside and look up at the sky and see if I can find a full moon…
There is something odd about the markets right now in how jumpy they seem on so little real news. Tuesday’s big risk dump seemed to involve a 180 degree turnabout in sentiment that flipped around 180 degrees 12 hours later. And what caused it, China increasing rates 25bps?
It seems half the market is made up of momentum traders trying to figure out which way the other momentum traders are going to jump.