The Beatles spoke a good deal of investing wisdom in the hit song “Let It Be!” (hear song) (see lyrics here)…
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Quality Investment advice from the Beatles hit song “Let it Be” sure applied when it came to what to do at key resistance and the “Head & Shoulders” topping pattern….suggesting that investors should- Let It (Risk Assets) Be and just harvest/walk away! This type of long-term resistance/topping patterns was suggesting the “Buy, Hold & Hope“ strategy was going to be challenged in a big way.
The mid-line of the multi-decade rising channel is now in play at (4), with the bottom support line of the channel over 25% below current prices.
A break of this support line would re-enforce two themes….(1) Let Risk Be/Risk Off is the position to take and (2) GE2 (Great Escape 2) will pick up selling momentum! (remember in 2008/GE1, there was no place to hide…the same thing is happening again!)
Mark…Ironic that the quiz last week was FCX, with the answer posted on Monday. Next day, Cramer spent 10 minutes pounding the drum on why the fundamentals on FCX were good. Interesting…
Chris
Thanks again, your responses to comments (plus theatrical talents) are really helpful.
PS Let me add congrats on happy family events.
Mark… I didn’t know you were so musically talented! 😉
It is some of the day to day action that makes me lean towards the weekly charts….that is why I keep sharing the Wilshire weekly, which on a weekly basis remains above support.
You know I am a pretty boring guy and I like sticking to fancy rules like, “buy on support, with a stop below support.” The quiz last week reflected that after a 50% decline in less than 100 days, FCX was setting on support going back almost 15 years. Could a counter trend bounce take place here? Sure could. Premium members bought SMN recently and trailing stops took them out yesterday, with gains exceeding 30%.
Another boring rule…if aggressive, if support breaks, go short with a stop at the new resistance. If FCX fails to hold at support, basic materils, copper and the economy are most likely in bigger trouble than most people think! GE2 does not have to happen and is not a sure thing, yet a breakdown in FCX at support would sure increase the risk of it taking place. We will load back up on SMN if it does!
As everyone knows, I have strong beliefs in the messages coming from the high yield fund complex. At this time, they are suggesting we can’t trust rallies! I attempt to share Sprinter info (for short term investors) and Marathon info (for medium to long term investors). Right now plenty of snowflakes are falling suggesting that Marathon investors set out this dance!
Chris
Whoa, do you mean to pick up FXC now, expecting a coumter-trend bounce? Re Beatles lyrics, perhaps ‘Yesterday’ or ‘Day Tripper’ are more appropriate than ‘Let it Be’. Looking also at your Russell chart… Support at 640, resistance at 670, and it’s now at 650… Does this return us to ‘let it be’, waiting for a break up or down?
Dan… For sure the 1120 area is important….in the 30-year chart on the 500 today, I mentioned the 500 is at the mid-line of the channel, add that one to the list.
Anyone recall the quiz of last week and the answer given yesterday? See how FCX did today? The support line I highlighted in this link go back to 1996.
Speaking of bullish wicks, that support line is full of them and now add another to the list. With FCX down over 50%, while the 500 index is down 20%, FCX could make members over 25% on a bounce!
Great questions and Thank you Dan,
Chris
Chris –
What are your thoughts on the S&P after today’s late rally? SPX closed at 1123.95. Non-confirmation of the break of support, or just a one-day anomaly?
The large downside wick for the day makes me nervous, especially when it’s in the range of 1100 to 1120, as that’s shown itself as strong support on numerous occasions. It’ll be interesting to see if it jumps back up into the 1120-1220 channel, or drops back below 1100.
Thanks,
DJ
Chris,
classic retest of what was support / now resistance of 1101…and then the big drop can begin?
Chris The multi-decade chart looks something like a decade long head and shoulders? Left shoulder around 2000, head 2007, right shoulder now?
All the best to your daughters… and to you too.
Thanks Sonny
cjk….Line (2) is not (3), yet if you extend line (2) in both directions, what do you think happens? 😉
Great eyes and question!
Chris
Hi Chris – great charts (again). Line 2 in the first chart almost appears to be the same as line 3 in the second chart, but it is not, correct? thanks, cjk