The Dow rocketed up 100 points off the open in what appears to be a terminal pattern. Anyone who has decided to short-term play the corrective pattern by trading long should consider pulling their money off the table, as this market is extremely overbought, and waning fast.
I will most likely have some more updates later, however today is a busy day in the off-line realm.
If you have any questions feel free to email me: Derek@investophoria.com
Cheers! And happy Friday!
Derek.
SATURDAY MARCH 6 Updated Chart.
Major Market Crossroads
Furthermore, the average person's perception of ongoing reality compared with their expectations for the future are extremely disjointed. The current situation (the tangible) is still extremely bleak, according to the consumer confidence index. Expectations for the future, however, are filled with hope and rallied beautifully with the stock market. The future is an intangible thing, just like a financial asset, and the psychology/optimism towards the intangible is highly elevated compared to the stark realization of the physical here and now.
The next few trading days are key to determining the next few weeks/months.
Derek.
Posts
Derek,
ReplyDeleteWhere are you getting that 10840 number?
Cindy
Correction: Labeling on the Chart should say: 9,840.
ReplyDeleteThanks Cindy!
Derek.
Derek,
ReplyDeleteWhew - I was really confused. Thanks for taking care of that so quickly.
Have a nice weekend.
Cindy
Not before it breaks 10,625 first..........
ReplyDeleteThanks for the explanation.
ReplyDeleteI can do that in 15 minutes, hehe, but I am not available for hire.
Good luck with the new site. Btw, I wanted to follow all my prior posts by saying I do not say it is impossible for someone to earn money from trading if they use stops on wrong calls, and let winners run. I see for example Chris Vermulan documents his performance and did roughly +60% last year. However, my beef with that is that so did any one who bought silver at the start of the year too.
But those who want to hedge or earn money on the downside, can't do that with a long position. So I can not say for sure that there is no value in what Derek is providing. If anything, he has clever ways of interpreting charts and it is interesting to read. Again good luck with your new service.
-Shelby
Apologies that post was meant for the other blog, accidentally posted it on this one.
ReplyDelete-Shelby
The paradox that is overlooked is that when you short, you are a buyer. All you are doing is delaying your buy order.
ReplyDeleteOne of the key items from which we are barred information is an up to date account of the true figures of those shorts (delayed buys). But there are those who do have this information.
However, that does not stop a good 'bear', even without this information, making money in a down market. But it is important to know where he/she stands.
The true professional bear, the ones who always make money in such a market because they do have the information always wait until the baby bears (the novices) have been squeezed out. They are the ones who jump in too early trying to anticipate the top.
And they probably commit too much too early so become quickly nervous if the market moves against them.
The smart ones see all those 'shorts' for what they are - 'buy orders' in the waiting.
Too many shorts in the system clog up the drain and stop the flow down, or make it sluggish.
It also provides the larger long holdings the opportunity to get out on the way down without losing all they made on the way up.
If you get these mental pictures in your mind of the process taking place, it does help to control the emotions, unless you are an over emotional type. If you are, you should not be trading in the market.
Just a few thoughts to keep in mind, especially at this point in the market.
@Ray
ReplyDeleteExcellent point - what the majority of people who constantly bemoan the practice of short-selling (usually perma-bull types) don't realize, is that short sellers are what actually puts in the initial FLOOR in falling prices.
If there were only buyers and sellers with no short selling, price declines would be far faster and more a-b linear in formation. The reason there are retracements and major pauses/sideways movements in markets is because short-sellers are covering their open positions, temporarily shoring up the bid/buy side of the equation.
Derek.
Personally I see the mkt at 6000- or below,by end if Summer, Fall at latest.....the entire thing is /has been propped up by the Feds spending, and Interest rates.
ReplyDelete"....If there were only buyers and sellers with no short selling, price declines would be far faster and more a-b linear in formation. ...."
ReplyDeleteDerek EXACTLY!
This is more so today because short selling is more widely practiced, and in a much larger and 'virile' market than in the days of Livermore.
It is in the final 'Bullish' (uptrend)
when the baby bears throw in the towel that is usually signalled by a spike from where the down trend starts. However, this is not set in concrete.
Today, because there are many 'traders', scalpers, whatever, there is to be expected much seesawing
and side-stepping down.
The bear must pick well his entry points to get the best gain, and,
then stick with it. I have the feeling it will be a slow journey down, if that is really where we are heading.
To me, it is about as good a 'traders' market as one could wish for. The brokers won't grumble, they love it.
And the discount brokers need it.
Derek,
ReplyDeleteDon't you see one more rally in gold, silver and PM stocks short term? Perhaps even testing the 1200 something gold high? Certainly we are pulling
back some for a few days but then what?
Thanking you in advance for your input!
Someone posted a comment at my forum about the gap that needs to be closed on gold chart:
ReplyDeletehttp://goldwetrust.up-with.com/precious-metals-f6/gold-as-an-investment-t60-180.htm#2787
That gap is the same Jan 19 target that Derek is using for his maximum target for his stop on his "Major Market Crossroads" chart above.
Could the market turn down from there this coming week? If so, the market is volatility is accelerating as that would be quite a disjoint turn of events from the ramping bullishness we've seen past couple of weeks.
There are more charts at my forum that add some insight:
http://goldwetrust.up-with.com/precious-metals-f6/gold-as-an-investment-t60-180.htm#2770
http://goldwetrust.up-with.com/precious-metals-f6/gold-as-an-investment-t60-180.htm#2761
http://goldwetrust.up-with.com/precious-metals-f6/gold-as-an-investment-t60-180.htm#2783
I want to lean towards "we go set a higher high", but on the gold chart this would mean a new breakout thus invalidating the chance of any breakdown past $1000 in future, and I am usually too early and too late to every party, thus when I capitulate, it is usually the sign that no more fools to fool, so time for TPTB to reverse the direction of friction on the rigged roulette wheel. We will probably get the answer this week...
-Shelby
Correction: that is HUI, not a gold chart. Let me repeat my comment corrected...
ReplyDelete==========
Someone posted a comment at my forum about the gap that needs to be closed on gold HUI chart:
http://goldwetrust.up-with.com/precious-metals-f6/gold-as-an-investment-t60-180.htm#2787
That gap is the same Jan 19 target that Derek is using for his maximum target for his stop on his "Major Market Crossroads" chart above.
Could the market turn down from there this coming week? If so, the market is volatility is accelerating as that would be quite a disjoint turn of events from the ramping bullishness we've seen past couple of weeks.
There are more charts at my forum that add some insight:
http://goldwetrust.up-with.com/precious-metals-f6/gold-as-an-investment-t60-180.htm#2770
http://goldwetrust.up-with.com/precious-metals-f6/gold-as-an-investment-t60-180.htm#2761
http://goldwetrust.up-with.com/precious-metals-f6/gold-as-an-investment-t60-180.htm#2783
I want to lean towards "we go set a higher high", but on the gold chart this would mean a new breakout thus invalidating the chance of any breakdown below $1000 in future, and I am usually too early and too late to every party, thus when I capitulate, it is usually the sign that no more fools to fool, so time for TPTB to reverse the direction of friction on the rigged roulette wheel. We will probably get the answer this week...
-Shelby
Thanks for the update. It is extremely difficult to call market tops/bottoms, especially with this market. Derek, I agree with your latest update, so I still say 10,625 will be broken first, then re-evaluate after that....
ReplyDeleteLOOK AT THIS VIX CHART!!!
ReplyDeletehttp://goldwetrust.up-with.com/precious-metals-f6/gold-as-an-investment-t60-180.htm#2791
Time to sell!
-Shelby
More correction, then SILVER to outperform HUI
ReplyDeleteWe won't get any crash like 2008, because P/E ratios have recovered.
I think this would be a good post to end on, because it ties everything together to give us a good idea of when and what to buy this year, and then hold on tight for a rocket upward in 2011 or 2012:
http://goldwetrust.up-with.com/precious-metals-f6/gold-as-an-investment-t60-180.htm#2792
-Shelby
Derek
ReplyDeleteIn a prior post i asked if you anticipated one more rally in PMs before the decline. As one who wishes to subscribe to your service I would appreciate some input.
Thank you!
TPTB are fascinated by such a small thing
ReplyDeleteWhy are TPTB focused on something that is 0.7% of GDP of a small GDP country?
http://goldwetrust.up-with.com/economics-f4/inflation-or-deflation-t9-330.htm#2795
Back slapping extremes
ReplyDeletehttp://finance.yahoo.com/news/The-Rebound-Numbers-tell-apf-1190812181.html
Time for correction.