The Russell first started creating a quality repeating pattern reflected in the quiz below, first posted in July. (see post here) This repeating pattern was one of the cleanest repeats I have seen in my 30 years of observing and creating Tens of Thousands of charts!
The inverted chart below reflected that the current pattern looked almost identical to the 2007 highs and for those that are open to shorting/scoring on defense, (2A) in the chart below was an ideal price point to establish shorts. This was a “prime spot for an inverse ETF to start a rally!”
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Below is a shorter-trem update to the above chart first shared on dshort and here (See post), last week. Reflecting that so far the Russell is continuing to create quality repeating patterns and another opportunity was at hand to short the Russell was at hand.
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So far the shorts are doing ok since putting them into play last week. Numerous emails have ask, where does this pattern go from here. Below is and update and a thought on this repeating pattern.
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Resistance looks to have held at the 50% level where the shorts were established. If the Russell is to chop around in a repeating manner like in did in 2008, establishing tight stops around the 650 level, to protect gains should be the game plan.
John…Thanks for you viewership and kind words. I believe Moving averages are great tools when attempting to capture around 70%+ of major uptrends and to help avoid the opposite, about 70%+ of major down trends. I use moving averages on the high yield funds, otherwise I don’t make decisions with them on other products.
My strategy (TB&M) actually came about due to the weakness of moving averages. I used MA to a great degree in the late 90’s/early 2000’s and yet I became frustrated with how much money they left on the table at key turning points. Didn’t harvest at highs as well as I wished and didn’t buy in as soon as I wished. I created “TB&M” (Tops, Bottoms and NO Middles) to compliment MA strategies.
TB&M works to catch key exhaustion and reversal points, where moving averages are great at capturing the middle ground, not turning points. Since MA’s are so easy for people to chart, I wanted to share the compliment to them, being a strategy that makes its main focus on Tops and Bottoms.
Thanks for the great question,
Chris
I find your charts very informative and accurate. My question is do you ever use moving average’s with your charting (10 day, 21 day,50 day). Thank you for your time…John
Chris,
Thanks for the insight here. Action has been profitable so far and support/take profits advice is in play.
On related topic – NDX100 post from 11/17. Jumped into PSQ and wondering where do you see support for NDX100 – at the 2040? Or asked another way, where should stops be placed to protect profits?
Ed