4:30 AM ET
Politics doesn’t matter. There are two rules.
Don’t fight the Fed.
The trend is your friend.
That’s all you need to know.
The ES fucutures hit our target of 3560 in the early going overnight, and have pulled back a little here at 4:30 AM ET. I have no new 5 day cycle projection yet.
Click to engorge.
Looking at the 30 minute bars, a pullback to 3540 or even 3535 appears to be in order. Below that, I would allow for 3515-20 before thinking about a potential downside reversal. If 3540 holds, then 3620 could be reached in a flash.
Don’t forget to click to engorge.
Here’s a 2 hour bar chart for perspective. Where the overnight high was at 3565 is a significant resistance point at the conjunction of multiple trendlines, one dating back to the September low.
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9:15 AM- I wasn’t paying attention for a couple hours and looked up to see this.
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Short term cycles turned up on schedule, triggering the overdue upturn in the 6 month cycle. The 13 week cycle up phase got its expected second wind. All cycles from 4 weeks to 6 months are now in gear to the upside. The 4 week cycle currently projects to 3560. The 13 week cycle points higher–a lot higher.
Chart pick performance was strong last week. The average gain grew from +2.5% to +5.0% while the average holding period fell from 14 calendar days to just 8, or barely over a week. Our shorts got stopped out early, protecting a small net gain on those, on balance. Meanwhile the long picks were able to take advantage of the market surge.
I am adding 6 picks to the list as of Monday including 3 new longs and 3 new shorts. I am closing out one pick. With these changes, that will leave 10 open picks, 7 longs and 3 shorts.
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Wouldn’t it be nice to be able to generate a 5% gain every 8 days? Obviously, that’s not going to happen. But the plus signs are nice. Of course, we’d like to beat buy and hold, too.
A long/short trading strategy won’t do that in a broad, sharp rally like last week’s. That’s because we always have at least a few shorts. That costs us when we have a straight up week in the market. If we consider the last 8 calendar days as a basis for comparing performance, we were about 1 percentage point below a buy and hold SPY strategy.
But always having a few shorts means that we should outperform rangebound and down markets. My technical stock screens will generate lots of shorts when the market is trending down, and hopefully my eyes will recognize the best ones from that group. The goal is that when the market trends down (someday), the chart pick list should not just massively outperform a buy and hold market strategy, not just by losing less. It should be positive on balance.
Another goal I have for these weekly chart picks is for it to be easy to follow. Once a week entries obviously aren’t optimal from a market performance standpoint. But for busy people, it’s a good alternative. We generally have a few picks each weekend that we can enter on Monday morning. Then, setting trailing stops frees us from the trading screen. We can go about having a life!
But I don’t like automatic stops. What about the use of mental stops? I usually put stop levels on the chart pick table. I set an alert to be sent to my phone and computer screen at the stop level. When I’m actively trading my own account, I use a chart trendline or moving average representing my trailing stop line. When I get that alert, I get on that chart quickly. I wait that 2-3 minutes, and if there’s no reversal, I trigger the trade and move on.
Again, this is just my way. I’m sharing it with you for informational purposes. You have to do it your way. I just try to give you useful, actionable, and hopefully profitable, information for you to use as you see fit. If you are not an experienced trader, consult a professional investment advisor for guidance. That’s not what this is.
Past performance doesn’t indicate future results. There’s always risk of loss. Chart picks are theoretical for informational purposes only.
