Wow, what a comeback!
Maybe the 4th time will be a charm as we once again attempt to break that top line on the Russell (along with our other indexes). Of course, if you zoom out to a monthly chart, you'd see that this saw-tooth patten can form what they call an "island top", which is a signal of possible rally exhaustion.
I know we're exhausted with all these ridiculous "rallies" that are spurred by talk of more stimulus whenever we threaten to fail a support line.
After getting burned in 2009, the Fed (and all the Feds) are simply terrified of a sell-off getting out of control and so, they have backed themselves into a corner of having to placate the markets every time they have so much as a sniffle, lest it turn into pneumonia.
As I've noted to our Members, when we have 5 days of selling with 782M shares transacted (SPY) while the S&P loses 5% and then you have 2 days of buying with 269M shares transacted – can you really call that a recovery? More than 3 times more money went out than went in and our original premise was that there was weak support due to low volume in the first place. How would 2 days of low-volume buying have fixed that? If anything, our support is shakier now than when we started.
As I noted to our Members in this morning's Live Chat Room:
This is why I have to keep making bearish calls – there is MASSIVE manipulation going on – you can't trust anything and it's OK if we don't make money on the way up – that we can always recover from – what we really want to avoid is LOSING money in a crash and blowing a fantastic opportunity to bottom fish because we're scrambling to get out of things that we chased because we were too impatient.
Our STP/LTP combination remains around $755,000 as we added $13,000 more TZAs a bit too early yesterday but I sure slept better knowing they are there. Our next step – if the strong bounces hold, is to make a few bullish adjustments to the LTP and then, during earnings, we can go shopping with the $155,000 (25.8%) we made last year.
I know this may seem tedious to some of you who crave constant action but, as I say so often I'm sick of it myself – if you make a steady 20% a year for 20 years, you turn $500,000 into $26,413,766. DO NOT tell me that you do better than that day trading – You don't! Turning $500,000 into $26M in 20 years is a REALISTIC goal using this system and I'm sorry if it's boring, but it works.
It's not like we're not buying, we picked up RIG ($16.27) just yesterday as a Top Trade Alert and we've actually had 20 bullish trade ideas for our Members since Christmas – so plenty of bottom-fishing on the way down but SENSIBLE plays, much if them in the materials sector – which we feel has suffered long enough BUT may suffer a bit more so we're taking small initial entries with the intent of adding more if the selling contines.
IN PROGRESS
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