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Explosive Rally Ahead, or Plotz

The current setup has the potential for an explosive rally. It doesn’t guarantee it, but we want to be prepared to take advantage if it happens. By the same token, we want to be alert for the signs that this could go south on us.

The charts, tables and discussion in this report show what to look for, with some ideas on how to trade it.

5 short term chart picks were closed out last week. 4 hit trailing or fixed stops. One was a proactive decision to close out. That left 10 open picks at the end of the holiday shortened week.

Including both the closed and open picks, the theoretical average gain (100% cash, no margin, no options) was +3.2% with an average holding period of 11 calendar days. That’s down from +4.3% and 11 days, the week before. The average gain has shrunken from 11% with an 18 day average holding time in the last 4 weeks as the market’s trading range has tightened.

This will leave us with 16 open picks. 3 will be shorts and 13 will be longs. That remains a strongly bullish bias. I have some thoughts in this report on how to tweak setting stops to improve list performance.

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These reports are for informational purposes, aimed at a broad audience of investment and trading professionals, and other experienced investors and traders. Chart pick performance changes week to week and past performance may not indicate future results, as you know. Trading involves risk, and these reports assume that you understand those risks and manage them according to your tolerance. 

Lee Adler

I’ve been publishing The Wall Street Examiner and its predecessor since October 2000. I also publish LiquidityTrader.com, and was lead analyst for Sure Money Investor, of blessed memory. I developed David Stockman's Contra Corner for Mr. Stockman. I’ve had a wide variety of finance related jobs since 1972, including a stint on Wall Street in both sales, analytical, and trading capacities. Prior to starting the Wall Street Examiner I was a commercial real estate appraiser in Florida for 15 years. I was considered an expert in the analysis of failed properties that ended up in the hands of bank REO divisions, the FDIC, and the RTC. Remember those guys? I also worked in the residential mortgage and real estate businesses in parts of the 1970s and 80s. I have been charting stocks and markets and doing analytical work since I was a teenager. I'm not some Ivory Tower academic, Wall Street guy. My perspective comes from having my boots on the ground and in the trenches, as a real estate broker, mortgage broker, trader, account rep, and analyst. I've watched most of the games these Wall Street wiseguys play from right up close. I know the drill from my 55 years of paying attention. And I'm happy to share that experience with you, right here. 

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