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Tuesday, May 14, 2019

Market Update 5/14/2019 - Reviewing the pullback of the past week

Picking up from yesterday's blog.

Something I forgot to mention yesterday, was that I sounded the warning this past Friday May 10th, telling folks to put on protection, because the trend has been to take futures down overnight, and gap the market down the following morning, and that trend continued on Monday, where the market gapped down 50 handles. 

This was a pretty easy call, on a short squeeze Friday. ...way easier than calling the reversal on May 3rd, and this extends my winning streak to 6 days in a row. 

Emerging markets have been leading the way down, as seen on the chart below. Starting from May 3rd - where the financial news networks were seen falsely reporting, "new all time market highs". The $SPX is not a clear representation of the broader market, and this is why don't trust most of what's being reported, I trust the charts, and I chart everything. The $NYSE is not trading anywhere near a new all time high. Most major indices aren't...  

$EEM Chart: You can see on the chart below where the market has gapped down each morning, starting with the bearish lower high on May 3rd. The selling has been very orderly, and thus far this has been easy trading, but will this trend continue? I think not, but since OPEX is just around the corner, I believe we will see a tradeable rally, at least.

The charts have changed:

Long term - the market is still trending up, but all but a few bullish charts are broken, and I have a ton of analysis to do.

This I can tell you: As long as the $VIX remains below 20.50 then the risk-off trade is going to remain off. 2. Odds of a counter trend rally into OPEX is very high. I think we're at or close to a tradeable bottom.

Even looking at the market from a somewhat bearish point of view, we could easily retrace back to. or just above, DOW 26,000. 

The Financial chart I revealed yesterday, is one chart that didn't break, so it'll be interesting to see if that sector can lead the market higher.

Here's the updated chart I blogged yesterday: The breakout point will be the 50 day moving average, so is should be pretty obvious.

  To be honest I've reached the point where I can time markets accurately, and consistently, and once you reach this level, you don't want to give away all your secrets, and that's kind of where I find myself. I get a few donations here and there, but not enough to amount to much. I was thinking about doing a webinar broadcast, or launching a new membership site, but that's going to distract from my work. I'm really not sure where I want to go from here, so I may just take some time off, work on the book, and enjoy the summer.           

Monday, May 13, 2019

Market Update 5/13/2019 - Reviewing last weeks market pullback

 The answer everyone wants to know 

"is this a pullback, or the beginning of a larger correction"?

It's been a while since I've blogged, but I have a couple of announcements, and a critical market update, which requires more room to write than Twitter, or LinkedIn allows.

1. I'm thinking about moving this blog to a new domain, after finding a shiny new "3xtrader" website has popped up on the web, and is diverting google searches from this site. This throws a monkey wrench into everything I've been working on for the past 10 years, as well as future plans for a webinar, or new membership website. It takes time to build name recognition, and this couldn't have happened at a worse time. I'm afraid I may have to start from the ground up, and re-divert traffic...? If you have any thought on this issue, let me know on my twitter feed @3XTraders       

2. I discovered something this week that I would call an epiphany, and I think I've learned more about timing markets, in the past 5 months, than in the previous 5 years! I plan to share these secrets in an upcoming book, or webinar, so stay tuned. I'd like to be able to get this information out quickly, and reach as many traders as possible, but now it seems everything is up in the air.    

3. To get you up to speed on current market conditions 

As most of you probably already know I sounded the warning a few weeks ago, when the $VIX found support just above the 11 level. I said something to the effect that, "unless the $VIX could get below 11, and stay there, then the rally could not continue", and the rest is history.

Thursday we saw fear (as measured by the $VIX) top out around my 23.40 target. That was followed by a perfectly timed reversal, and massive rally into the close.

Friday we retested Thursday's low on the $SPX, on a much lower $VIX, which I alerted to as a "bullish signal", and from there we got another massive rally, off the 50 day moving average.

Whether this rally is sustainable is still debatable, but as long as the $VIX can remain below 20, this rally can, and probably will continue into the summer. Conversely if the 50 day breaks, and $VIX starts breaking out to new recent highs, then selling velocity will increase substantially, but I don't see that, and especially going into short covering season just ahead of the Memorial Day holiday. The bullish trend certainly isn't broken - see the chart below.         

I use many charts and observations to time markets, but the thing to watch is the 50 day moving average, and the $VIX high that was put in last week. This is where we saw sentiment change.

I can't say for sure, we're out of the woods, until fear continues to come out of the market, and the $VIX gets back into a normal range, so remain vigilant. 

I tweet out a lot of free charts on twitter, but here's one you may not have seen. Shows DOW financials trading into what looks like a familiar triangle pattern (in blue), and trading back above 601 support. Maybe we get another pullback around the middle of the summer, or going into the fall, but I expect the broader market and the NASDAQ to trade to new all time highs first.  

Follow me on Twitter @3XTraders, for up to the minute market updates.