Comments on Chart Swing Trader: State of the Market - 5/4/09

Anonymous, profit and discomfort sit side by side....

2009-05-05T09:49:00.000-04:00

Anonymous, profit and discomfort sit side by side.

The market has been in a pretty obvious uptrend for several weeks now, even if it is a grinding one. Greed is causing you to try to call a top in this market to catch the big move down. Really you should have been trying to catch the remaining move up because that is the trend direction.

Whatever trend indicator you use, it probably signals up right now. Moving averages are sloping up and are layered correctly, headed for the 200 SMA tests (NDX already blew through it).

Calling tops and bottoms is a losing game.

Great blog post on trend days, using today as an e...

2009-05-04T22:43:00.000-04:00

Great blog post on trend days, using today as an example:

http://blog.afraidtotrade.com/another-powerful-trend-day-befalls-us/

Tend to agree with your view, however, the market ...

2009-05-04T19:45:00.000-04:00

Tend to agree with your view, however, the market is saying otherwise. So I just day trade when I get the chance and am in cash by days end.
I look for stocks that have consolidated and look like they are about to breakout, and I will buy on the breakout, and get out quickly if it goes against me.
I feel very uncomfortable holding overnight.

Elio

Mac, You wrote a beautiful introspective piece th...

2009-05-04T17:19:00.000-04:00

Mac,

You wrote a beautiful introspective piece this weekend on your recent slump and your biases.

Thus, while I understand why you were hesitant today to go long after the morning gap up, I am surprised you tried to go short yet again.

The S&P is the most important index and it gapped up above the 875 neckline of a massive inverse head and shoulders. It had been flirting back and forth with the neckline all last week. Second, today the S&P not only broke above the neckline at the open, but formed a classic "trend day" pattern, as TICK and breadth were strong all day long, and the price never once even violated the 50 period MA on a 5 min chart.

Finally, you are still trying to fight the overall trend of Primary wave B up. Yes, it has been somewhat choppy, especially as the S&P formed the right sholder of the inverse H&S, but from what I have read, that is how most wave B's and right shoulders behave. Also, since Primary Wave A took 18 months, Primary wave B should last for at least 6 months (from what I read).

The shorter term moving averages on the daily charts are now in the most bullish orientation, with the 10 above the 20 above the 50 EMA. Thus, a test of the 200 day MA is likely inevitable.

Finally, I don't know if you're a member of stockcharts.com, but Arthur Hill had a nice write-up the other day on how oscillators and neg divergences on shorter time frames mean less in the face of a strong up-trend, and shows how the market kept uptrending in 2003 in the face of these same types of conditions.

http://stockcharts.com/members/analysis/20090430-1.html

Of note, the McClellan Summation Index printed the highest reading this past week since the Oct. 07 high. (Also April 07 high). The indicator printed highs of around 3300 in 2003 when the markets were coming out of the bottom. I don't that necessarily means there will not be a Primary Wave C down that starts in the next few months, but it just tells you that the strong trend is up now and should not be messed with.

Anyway, you're obviously a very smart guy, and you have pointed out what you are doing wrong, which is what makes it the most frustrating to read your blog posts everyday when you keep trying to go short and keep losing money over the past 8 weeks. I really really want you to make tons of cash, because the better you do, the better we all will do by following your lead.

BTW, every single time the stochastics on the 60 min charts got oversold over the past several weeks on the S&P, they were all great buying opportunities.

I'd have to agree with your risk assessment - thou...

2009-05-04T17:11:00.000-04:00

I'd have to agree with your risk assessment - though the market doesn't seem to care at the moment, it remains overbought in my view and only gets more overbought as it keeps going higher.

Right now it doesn't matter -- but one day, probably soon, it will. You're right, markets don't go straight up forever, and you have to consider the risk/reward factor.

I hear ya. I got stopped out of FAS last Friday a...

2009-05-04T17:05:00.000-04:00

I hear ya. I got stopped out of FAS last Friday and didn't feel comfortable chasing today....