Price continues to climb the 1×1 angle which is inverse to the slope of the bear market decline from 2007-2009. Price has been moving up well over 180 from the March low and shows no signs of weakening. The move beyond 180 days has set me up (and changed my mind) to look to buy equities on a significant decline. “Significant”, for me, requires at least a 60 day correction and I would be much more comfortable looking to the long side after a 90 day pullback.
Dynamic Chart
So where will I look to reenter my long side positions? I have no idea. I will allow the market to tell me when and where to buy stocks. The first place to look will be the 2×1 on the 2002-2007 range. Next will be the 1×1 angle. Between now and then the market can tell me to do something entirely different.
The idea is to be flexible and move with the market. Some people I read on the internet make up their mind months in advance and refuse to change when the charts do something unexpected. I believe this is a terrible way to try and make money. Flexibility is a strength and is applauded by the market, while conviction to “anything” tends to lose much more money than it makes for investors.
Dynamic Chart
What to I expect out of the bullish move I am planning for? I “expect” a move back to test these levels. Due to the strength of the current market I think there is a real possibility of new highs beyond the rollover price. But I am flexible. Remember that the 1938 market moved up 63% from March to November and looked great until it didn’t – and then a multi-year bear market followed.
How To Posts
The following posts were written previously and may provide insights into my thought process as I write blog posts going forward.
- Selecting a Significant Range
- Adding Time Angles
- Calendar Days Vs Trading Days
- Trading with Gann Fanns – One and Two
- Gann Square of 9
Related Posts
Tags: Market Outlook5 Comments
That’s one very good way of how to get wiped out.
“The idea is to be flexible and move with the market. Some people I read on the internet make up their mind months in advance and refuse to change when the charts do something unexpected … while conviction to “anything” tends to lose much more money than it makes for investors.”
Andy, I am not sure what went on but I think the market is experiencing a reverse deleverage of all the shorts with that “conviction” + the hopefuls and wanna catch the next boom folks who were “left out”. I really do not see the fundamental changing for the growth that the stocks have priced in. We shall see what the market action says over next 2-6 months. I am strating to see the signs of capitulation in $USD, and short ETF’s. But that could be just the beginning.
Ray – I’ve been following the US Daily Treasury Statements for taxes (withheld, paid, and corporate) and comparing them with last year. It looks to me like the economy is about to fall off the cliff. Much less tax money coming in than last year. I don’t much care what this means for the US Treasury balance sheet, but the lack of taxes paid tells me fewer people are working and buying stuff. I’ll put a post up on it in the next couple days.
For my last Elliot wave count, I am thinking now maybe I was wrong and that we might have experienced wave 5 of 3 of C of Primary 2… so if that is correct I expect wave 4 down or flat zig-zag, to be followed by wave 5 up where final capitulation of weak shorts will happen, and exhaustion of buyers. Keeping an open mind that correction might be just be that and not a continuation of BEAR as Elliot wave would suggest.
BBH looking like bullish Cup & Handle