Bull Market Returns ........as long as we get past the head fake possibility
We got our breakout of the congestion area today to the upside, it just sort of felt like this was where we were going, but I don't trade on feel and the charts until today were still telling me to trade this as a retracement in a down trend. Now that we have the end of the year rally rolling it appears, we just have to watch for one last thing. I have marked on the chart the low of today that needs to hold for a couple of days. If for some reason today's low were to be taken out quickly we would have to call this a trap pattern. I do not expect this to happen but if it does I will likely be shorting this. I think we will just work our way higher through the end of the year now.
The Naz is still in a down trend on the weekly but the other two indexes are not. If you decide to try for a short do it in the Naz. You can still argue the trend is down on the weekly there. We did also get a break down in Bonds today which confirms the up side break in stocks. It looks like our Euro chart has finally missed a beat. You could still argue a turn could still happen and it could, but that has been so accurate that it has not really missed like it has recently for a while.
One thing to keep in mind with cycles, we can't expect them to be perfect. I have marked 1/4 where there is basically a lower short term high in the forecast and price could do the same. If we get back up and do a high test and turn back down we could still argue this forecast was pretty darn good. I think it is easier to stay with a long term up trend until we get a clear and definitive break of the trend. When this happens we will all be able to see it.
I think this next chart is interesting, the huge lag that is developing with Gold vs the Stock Market.
On this recent rally both Crude Oil and Gold have gone down while stocks rallied. That is a clear departure from the tight link we have had for a very long time. It tells us we should be looking to short those markets before we short stocks due to the comparative weakness.
I get a lot of emails of why we do this, why we do that, and also suggestions on what we should be doing. The trading services are what they are, they are our trades. It is up to you how you use them. I am not going to change how I trade because I have had two weeks of bad trades. I am not going to trade more or less because of two weeks of bad trades. Folks some people go through 20 years of bad trades. The trades are how I trade and I am not going to change them. I don't make money in every trade I do and neither does anyone else.