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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.


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