STORM IS BREWING
Here is an updated version of a chart I have had in here previously where I predicted that we would at the very least hit 1122 which was the 50% retracement to the all time highs. No great shakes there, anyone who has ever studied retracements probably got this one right. I predicted this recently, not several months ago. For the record, several months ago I did not think we would get this far. It was after several failed sell signals that I fortunately did not take, that I realized this trend had some real power. Ironically I have made some money on the short side during this rise, which as I look at this chart seems impossible, but more importantly, ignorant on my part. I have not been good with this market this year, but I call them like I see them.
Commercials did sell this recent week on this breakout, but that means nothing really, they have been a worthless indicator in this market. My Hybrid above has been much better, although still missing once big time. The reality of it is, you want to watch them on retracements in trends, like Gold is having now, to see what they are doing. Gold the commercials are not buying into this retracement, so that tells me we could go down alot more there. In this case above, the sell indications in most cases have been good, but the ones that have been with the main trend have been the best. This is a lesson I learned the hard way, ignore commercials when they are against a trend unless they are at an extreme, like GOLD where that extreme ultimately indicated what will probably be a high that will hold for a decade or more. Even with the GOLD market you had to ignore commercial selling for months before the high was ultimately made. Watching them was not a good indicator of where the next move would be because of how early they were. They were right, but very early.
My Hybrid indicator is in middle ground and also Larry Williams Will Go short term is also in neutral ground. However, the Will Go Long Term is indicating a top right where the Bradley model does. This also ties into a recent seasonal down tendency in the first quarter of next year. When we combine all this with the politics that are going on, we do have a recipe for a significant decline. One added factor, is the meltdown in the Bond Market that is happening. There is a lag factor, but ultimately weak Bonds usually means weak stocks are coming.
No reason to get aggressively short yet, but this is setting up a big trade for next year to the downside. I doubt we get any major break the balance of this week, but some of these things are going to matter eventually. It is hard to know what the catalyst might be that will knock this off it's horse. The way I trade I use technical patterns, so it leaves that guesswork out of it. However, if I were to venture a guess, the monstrosity in the Congress that will probably pass about the time these cycles just discussed are due, could be that catalyst. If I see a short term pattern for entry that lines up with these time frames, I will post it here at that time.
I am dinking around with a couple of trades right now in the currencies and one in the meats, but for the most part I am trading lightly during this holiday period.