I did not get the gentleman's name on CNBC this morning but I liked what he said:
"I'd rather lose an opportunity than lose capital."
In hindsight it appears that I have lost an opportunity in the Qs. In retrospect, it seems clear that the Qs should have been bought after the huge rally on 5/26. However, the underlying conditions that kept me out of the trade still exist: low volume, narrowing breadth and diverging momentum. All of that could change today, but somehow I don't think it will.
Past experience suggests that more often than not when a market is rising on low volume and declining participation, a correction is likely sooner than later.
While it is true that price rules all other considerations, that rule applies to risk management and trade direction. It is not meant to compel us to take every price signal when there are sufficient reasons to stay on the sidelines.
Even in the runaway Nasdaq market from October 1999 to March 2000 there were two sharp pullbacks to the 50dema prior to the top. I suspect that a pullback to the MAs will occur prior to the end of the first leg of this bear market rally. We can assess the market action when that happens and decide if it is time to take a new position in the indexes.
This mornings pop may be completing a small degree 5th wave that will lead to the expected correction. In the meantime, I remain long GE, JPM, ASIA, TNDM, SOHU, ORCL, DZZ and short JNPR and GME as well as a few other positions.
Subscribe to:
Post Comments (Atom)
4 comments:
Golden Cross (GC) almost occured for Q's. Upmove may be "safe" UNTIL the GC takes place. Once the GC takes place mkt is more vulnerable to a pullback.
Think of GC as a magnet in a "bull move" just as resistence is a magnent in a bull move.
This entire choppy upmove since 5/15 has the feel of a "b" wave. Sure, it's disproportionate in time to the "a" wave from 5/8 to 5/15; but that reflects the intermediate underlying strength (& the big running correction taking place) that has been driving bulls & bears nutZ.
The downmove after the GC may be the shakeout that needs to happen before the next stage acceleration.
Regards,
dave
Craig,
I meant to place PBR comment here not under "VRSN crashes". Sorry.
Regards,
dave
i hate trading ranges.
i hate getting whipsawed.
If this keeps up, i'm going to be scared of my own shadow.
dave . . . no regards
Dave,
I agree. I think the GC definitely acts as a magnet since it is the convergence of "expected" price on two time frames.
However, price expectations are propagating on many time frames and we need to continually look at higher time frames to see what the MAs are telling us.
For example, on the weekly chart the Qs are being drawn toward the 200wema around 40, which also is a fib retracement level, having surpassed the 50wema. This is why we could expect higher prices after a pullback on the daily.
I think there is little doubt the Qs will hit 40 before this rally is over, but they have definitely got ahead of themselves.
Post a Comment