ONE SCHOOL OF THOUGHT

Here is the chart I posted the other day updated to how it looks now. You can see how extremely over sold we have gotten and are deeply into a buy zone. By the numbers if you test buying into declines above the 200 day moving average in the stock market, the results are very good if you take quick short term over bought exits. The problem with those approaches are times just like this where we just fall off a cliff, but are still above the 200 day. If you are buying into this you take it in the shorts big time. By the numbers with these approaches you should be long looking for the bounce.

You can see how similar we look now to the last big decline we had, and how far the blue line went into the buy zone before we finally rallied. I have tried trading like this and it is not for me because even though you hit trades at a very high rate, the losses when they come can be staggering and wipe out many wins all at once. I prefer to look to other triggers when I see us get this deep into a buy zone, for ways to get in where I am not catching a falling knife. Unfortunately, the way the markets have traded in recent times, we get one V top or bottom after another, and the price just reverses on a dime. It is very difficult to catch these lows.

The one big difference between the current state of things and the last time we had this many consecutive bars outside of the green band, is that we are above the 200 day moving average shown in red. At least by the numbers, that should make this a decent probability buying zone. You could say we should wait for the line to curl back down before going in and that is correct. However, for those who trade intra-day charts, you might be able to find a good pattern for a reversal and front run the daily turn around. I will not be doing that. I do think we will see the 200 day be defended by the PPT if we approach it. As I have said before, the only thing that has happened positively in the last 3 years with Barry is the stock market has risen. If they let that erode, he has no chance of re-election. It is hard to believe he is not down by 30 points in the polls to me. He is clearly the biggest mistake in the history of the world, and it is surprising most people don't seem to realize that. Maybe his opponent is just weak?

Net net here, I am looking for a bounce due to how oversold we are here in this model. Gold has risen nicely after that false break of the major support. This is why I said a close below that low was needed. It was an obvious short term trap spot. The powers that be know how critical that low is, and they are defending it with all they have right now. It remains to be seen if it will hold or not. If it does life is still good in Gold Bug land. If it does not the ruse is going to be exposed. Must see TV I guess at this juncture.

I did get a copy of the video of my interview in Chicago. For some unknown reason it looks very strange and I am debating linking it here. Here is the problem. I am not vain, I am beyond that point in life. You can see my mug shot in the blog, that is what I look like for better or worse. For some reason the video makes it appear that I have bad skin, and my skin is pretty much perfect. I guess it is lighting, but there are all kinds of ruts in my face that I don't have in real life. It almost makes me look like I had severe acne when I was younger, and I had none. I can't quite figure out why it looks like this other than there were lights that were so bright I couldn't even see anyone in the background, and maybe somehow that has caused this. I am just unsure that I want strangers whom I have never met to see this and have a false impression of my appearance. My first thought when I saw it was thank god I am smart because I am ugly now. I guess on some level it is vanity since I had many a door opened for me in my life due to my appearance, from modeling to other sorts of things. Based on this video, it is a face for radio now apparently. It is like a twilight zone episode basically. I went to sleep attractive and woke up a monster!

I am going to have a few friends look at it who know I have good skin and tell me what they think. If they say it is ok I will post it here. I have told them about it and they all have said that makes no sense because you have smooth skin, so maybe I am overreacting.

Good Trading