Thursday Update: The Long & Short of It


This is especially for new subscribers: We don't trade in and out of the market, we trade in the direction of the trend and enter trades at the end of counter-trends. In the current case, the dominant long term trend is down (see S&P Long Term chart below) and the dominant intermediate term trend is also down. The end of counter-trend rallies present high probability entries into the dominant trend.

These two charts illustrate this trend analysis. Price has broken down below the long term trend channel up from 2009, reversing the long term trend to down:

This SPY chart illustrates how we are using the Intermediate-Term Trend to generate Sell Signals at the end of identifiable counter-trend rallies. 

Two trades at the end of 2018 are the kickoff to what we hope will be many months of counter-trend rallies that give way to price moves back in the direction of the Intermediate-Term trend. Today, January 3rd,is the first red candle since the Dec 24, 2018 lows. Is the counter-trend rally post-Christmas over? We think so. If we are right there will be new price lows before January expiration. 

Note: Early today the shorter-term oriented Premium Service went Short QQQ and three individual stocks (buying puts) and Long VXX (bought calls).These new signals could be precursors of a new leg down. 

Next Standard Service update this weekend. Interim Updates as needed.  


Trades Table - Jan 3rd Close