The S&P may be in the process of forming a 1-2-3 reversal. It broke the down trend line during the recent rally and is now in the process of testing support. For you trader types this is the lowest risk entry on the long side. You could place stops slightly below the previous lows at 1040 and risk less than 2% on the trade.
If the market does hold support and rally from here your risk reward ratio would be very large. There are large momentum divergences forming in RSI and and MACD.
Hint: The least risky trade is to buy below support. If you end up being wrong your risk is even less than 2% and you may catch the bottom of a 2b reversal.
I thought you said before there is no such thing as a triple bottom.
ReplyDeleteUsually not. But it is a low risk entry for anyone who's foolish enough to try and trade the stock market.
ReplyDeleteHopefully 95% of the people who read this blog are smarter than that but hey I thought I would give something to that other 5% today :)
Oh the horror I can't take the pain anymore!
ReplyDeleteSame here. Listening to a jehovah witness every Sunday seems more pleasant now.
ReplyDeleteAfter all the warnings Gary has given against trading the stock market you guys can't seriously be long stocks.
ReplyDeleteBe the OleTurkey fellas.
ReplyDeleteYa, we're just here day in and day out to chat. Sheesh! That's like seeing a hot naked chick in your room and not masturbate. Sorry, we're not the last airbenders.
ReplyDeleteI love that GLD has a beta of only .11
ReplyDeleteMakes it real easy to hold like Ole Turkey.
If you have a hot naked chick in your bedroom, why masturbate? :)
ReplyDeleteSounds like a mother's joke setting up. :)
ReplyDeleteThe gold holds up like a champ!
ReplyDeleteIf we break 1040, where do we go from there?
ReplyDeleteActually if the market breaks 1040 it would perfectly time what could be a daily and intermediate cycle low.
ReplyDeleteIf one just simply looks at price action the May 6th low would mark a very extended daily cycle. From that bottom we would then have entered a very left translated daily cycle that is now on day 37. The normal timng band falls between 30 and 40 days.
For this phasing to work though the market must make a lower low.
That would surely trigger massive sell stops and virtually every retail trader in the world would short expecting the break of support to lead to a market collapse.
If however the cycle count is correct we would be within days of an intermediate bottom and all those retail traders would lose their shirts trying to sell short at the bottom.
Now do you see why it's so hard to make money in bear markets? (Not that I'm completely convinced we are back in a bear market yet)
Silver is dying. What gives?
ReplyDeleteSilver is down 14 cents.
ReplyDeleteHow is that gold short going for you DG? Have we learned our lesson yet?
Sheesh just like a mouse in a maze running down the same path over and over.
Tell us the truth are you really TK?
Got out of stocks awhile ago...just PMs now....But if the market does collapse, and since gold HAS decoupled, perhaps this may push into a final C-wave advance. People run scared into the only asset class going up, we get momentum, then greed, etc....
ReplyDeleteLong GE
ReplyDeleteI resent the comment insinuating I'm TK.
ReplyDeleteGary-
ReplyDeleteThere is your new lower low on the S&P. Hope the intermediate bottom comes soon (as in days) for all those stock investors out there!
Hopefully none of the readers of this blog are included in that group.
ReplyDeleteMiners are taking a hit too. I'm trying to become a old turkey but I'm getting worried and it's hard not to hit the sell button for my miners.
ReplyDeletequit looking at your computer and go on vacation. Otherwise sell your miners and buy physical and be done with it.
ReplyDeleteGary-
ReplyDeleteFor those stock investors out there-- Is there another low we have to hit to an intermediate term bottom?
If the cycle count is correct the next swing low would have good odds of marking the bottom although I would want to see another day of heavy BOW also.
ReplyDeleteGary--
ReplyDeleteoops -- I meant indicate an intermediate term bottom?
For an intermediate term bottom we would have to see another weekly swing low...at least.
ReplyDeleteGary-
ReplyDeleteWhat (money flow indicator-- (Money flow index?)) do you use for your BOW and what levels do you consider important?
The BOW data is available in the WSJ daily.
ReplyDeleteGary-
ReplyDeleteI know PM's and PM stocks-- I am on board but the Stock Game intrigues me beyond explanation! I am a glutton for punishment-- Do you place any significance on the dip down to 1035 but closed above 1040?
The BOW table:
ReplyDeletehttp://online.wsj.com/mdc/public/page/2_3022-mfgppl-moneyflow.html
Danny is looking for a bargain in stocks, when he should just buy Gold.
ReplyDeleteThat's the message.
Why oh why would you do that to yourself? Just leave stocks to some other poor schmuk.
ReplyDeleteYeah Daniel, it changes EVERYTHING that stocks dipped below 1035 and closed above 1040. You obviously have your mind up to buy stocks.
ReplyDeleteDanny boy you need to re-read last nights report.
ReplyDeleteHey Guys
ReplyDeleteI know-- I know-
I am relatively new Sub and have positioned myself nicely with PM and PM stocks-- Happy-
However, I did have some stocks before I subscribed and have (stupidly) held on.
Thank you immensely for the wake up slaps-- (my head is ringing)
I feel as though I am part of the family now!!!
A sea of red is a wonderful thing...next stop 900 area s & p...
ReplyDeleteDEFLATION baby...
Gary you're cycle nonsense doesn't seem to be working. Any thoughts? To think I was going to devote my time and money to this scam technique. Oh my!
ReplyDeleteTroll contrarian indicator starting to build?
ReplyDeleteLet it begin!!
ReplyDelete... or continue, as the case may be. :-)
ReplyDeleteI don't get it. I thought we hit bottom and bought just about every dip. Even PMs are down.
ReplyDeletepm
Gold was up today.
ReplyDeleteHey dumb ass read the post. Gary is just giving you morons who are dumb enough to trade the stock market a low risk trading entry.
ReplyDeleteIt doesn't mean it will be a winning trade although if you did as he suggested and bought under support you are now positive at the close.
Sheesh some people aren't happy even when you make them money.
some people are just happy when they are miserable...just like my Ex.
ReplyDeleteI like Gary's cycle work. It isn't always right but it is consistent and elegant.
ReplyDelete$50 billion and growing with no end in sight:
ReplyDeletehttp://www.thestreet.com/story/10795165/1/spdr174-gold-shares-exceeds-50-billion-in-assets.html?cm_ven=GOOGLEFI
Better own some gold!
TK should be about due for a bearish call on gold, thus guaranteeing more upside for us.
ReplyDeleteI love being long gold, but hate being on the same side as TK.
UN says to scrap US dollar as worlds reserve currency!!
ReplyDeletehttp://www.reuters.com/article/idUSTRE65S40620100629?
I already scrapped the USD as my reserve currency, opting for GOLD instead. :)
ReplyDeleteGary do you think we are done going down?
ReplyDeleteS&P 1000 tomorrow or within 3 trading days.
ReplyDeleteNo buyers down here...we should have bounced by now.
Miners seem to be trading in synch with the stock market rather than with gold price. They are dropping much more than gold.
ReplyDeleteGDX is at par....GDXJ is down alot!
ReplyDeleteGold isn't even dropping, but instead bumping higher.
ReplyDeleteThe Gold goes MUCH higher. Better get some while it's still cheap. IF we get a pullback, I intend to start using margin to add to my position.
Too bad all the small miners are getting hammered - they still refuse to decouple and probably won't unless gold really starts to leave the current resistance level behind. Oh well, back to work :)
ReplyDeleteDawler guys long the PMs - quick, everyone get out or get short!!! Hey has anyone notice that even though gold has rallied the miners have done new jack shit! Reckon we're heading for a correction, too many excited small fish bullish , plus dawler guys confirmed it for me.
ReplyDeleteBased on Gary's chart a reasonable course of action for active traders might have been to buy a straddle or strangle. Why do nearly all forum posters online seem to be only short or long? It's like no one has ever heard the concept of hedging.
ReplyDeleteI personally wouldn't suggest hedging for 99% of retail traders.
ReplyDeleteWhat's the point of throwing away capital into a wasting asset?
Just put stops on your positions and keep position sizes small enough that you never lose more than 1-2% of your portfolio on any one trade.
Hedging just means you now have to managing two positions and of course your broker will skim off his cut (which tends to be much larger when playing with derivatives).
Hedging is useful if you are a large fund and entering or exiting positions would move the market. I dare say that's not going to be the case for the vast majority of us.