PROJECT, PREDICT, POP OFF?
Having a blog is great because it allows you to just run your mouth constantly within a few normal bounds of decency. However, I am always accountable for what I say and "predict." With that in mind here goes a prediction of what I think is going to happen here. Above I have displayed how I think things are going to play out over the next couple of weeks. My indicators just appear to me to be in a mode where they are working themselves out of sell patterns and into a buying situation. This above chart features matches that I think are pretty close to what we have at hand and averages them out showing what transpired going forward.
Here is something else that is eerily similar. If you look back at the 1987 scenario it did feature an initial drop followed by a sideways to up move that lasted 2 to 3 weeks very much like what the red line is showing. Then what followed was the big drop. I have absolutely no idea if we are retracing out something like that here, one step at a time. I did initially think and stated as much here that the first bounce should be a sell and we are in the first bounce scenario right now. However, the indicators I use are really giving a marginal read as to whether or not they support that type of scenario. It will take a very big move to turn them back down today and that is why I did not get short the indexes last night. Time will tell if I will regret that move.
The above scenario shows a minor dip here that works into a buy situation, so that is now what I am looking for. If for some reason during the dip we take out last weeks lows all bets are off and this call is wrong. At times this software is uncannily accurate, but not always. It has been dead wrong on enough occasions where I view it as a supporting tool and not the end all. The next chart is the weekly Bond chart that appears to be setting up a sell signal. This would also make sense if we are going to get a stock rally.
You can see my modified COT indicator has moved into sell territory on this recent rally, and we are clearly in a down trend in price. This is generally the best way to use the COT stuff. The regular conventional COT has not moved down much yet, so this is not perfect. My own indicator is a work in progress, so it is not something that I have enough faith in yet to solely base a trade on. However, it appears so far to be better than the original COT signals I have used for so long. You can see that in general it goes into the same zones as the old one, but it moves a little faster. I am trying to figure out a way to get one that is more responsive on a shorter term basis than the old stuff. If and when I get it I will likely keep it to myself and use it to benefit me and my partner and future clients. I am not going to give away something like that free on the Internet. I did want to display it to make my point that I think we need to be looking for sell signals now here.
BLEW THIS ONE
I showed a chart the other day of a long we had on in Natural Gas and we blew this one to be honest. Yes we took a nice profit and it was more than double our risk, but we got out of this one too damn soon. When we got the two gold colored bars that indicate indecision and looked at where the trailing stop had to be at that point, I did not want to risk giving back too much so I pulled the plug on this one. This is a frustrating business, even a trade like this that was in reality successful, I blew. It seems that at times you can't ever get anything right in trading. I also am my own severest critic and it will always be so. I suppose I should feel good about a win like this since I had many contracts on at the above gain per contract, but you never want to let the big one get away and that is what I fear I did here. I am hoping for a pullback that meets my rules, to get back on this one but I may not get it.
You have my above prediction now for a brief dip of a few days that does not take out last weeks low, then a rally for the stock market and stock index futures. It is out there for public consumption and ridicule, so let's see what happens.