Friday, June 3, 2011

This Is Lunacy

Clearly today's employment number was the pits and the market, cash and futures, promptly took out yesterday's low.  As frustrating as it is, the fact remains that the large pattern has not really changed.  The only thing is that wave [c] of the triangle now appears to be working on a double zigzag correction with one more up down sequence to go.

During strong trends correlation with the lunar cycle seems to disappear almost completely, but during long consolidation periods like we are in now, the correlation seems to be quite strong.  In fact every high and low since the early March swing high has been within a couple of days of a full moon or a new moon.  Usually lows occur at the full moon and highs at the new moon.  The highs of May 2 and June 1 were one day early and the day of the new moons, respectively.  If the pattern holds, the next significant low should be June 15 +/- 2 days, and the next significant high should be July 1 +/- 2 days.  One thing about it, this triangle is becoming so long that it is way out of proportion as a 4th wave against the August 2010 2nd wave, which raises the odds that this is an (X) wave triangle.

Unfortunately, this week has done a great deal of damage to the charts of most individual stocks.  Where many were holding up reasonably well and building bases most have rolled over now or are showing signs of waning momentum on both the weekly and monthly charts with only a few expections.  I had said in early and mid May that I was looking for a rally into June for short term trades.  I took those trades and few have worked out.  They went from being short term trades to being intermediate term trades that haven't been stopped out for the most part.  I'm not optimistic at this point that they won't be stopped out either.

Overall, the plan was sound but the weight of the broader market prevented them from reaching their expected targets.  I use an initial stop loss and a trailing stop loss, so some will be stopped out at breakeven +/-.  Even so, the performance has been disappointing.  It looks like the next real opportunity for good stock trades will not show up until July.  However, there may be some opportunities at the wave [c] low.

1 comment:

Mr. Kowalski said...

Not lunacy.. mathematics. We as a nation cannot continue to solve a problem of debt with more of it. These ugly reports will continue and possibly accelerate as QE2 ends.