Weekend Update: Key Takeaways


Takeaway:  Almost an 80% drop over 18 months. The number or swings up and down were about equal, but cumulatively almost an 80% decline. Key Takeaway: Short every trend line break of counter-trend rallies (for reference, usually first or second red candle after multiple blue candles). 

Takeaway:  Individual stocks provide some of the very best shorting opportunities. Key Takeaway: Short every trend-line break of counter-trend rallies. 

Takeaway: Same pattern on Weekly charts appears on Daily charts. Key Takeaway: Only a 4% drop in SPY (around 10 points as of this weekend) results in a 100% rise in next-month at-the-money puts. Puts bought pursuant to the Dec 3-4 Sell went on to gain 891% on the 16.6% drop in SPY, so we recommend that after taking initial 100% gain, leave a little on the table for times like this.

Takeaway:  Market crashes can be swift and deep, or drag on and deep, or both. Key Takeaway: Although the Sell signals on the chart are hypothetical (Blue Line did not exist in 2007-2008), the signals are based on the exact same parameters we use today to generate Intermediate and Short-term trading signals.

"Those who cannot remember the past are condemned to repeat it."

-George Santayana


What If?

Every day of this maddening counter-trend rally is one day closer to a downside resolution. What if there is no crash or bear market in sight, that new all time highs are ahead? Our signals will eventually turn bullish, starting with the strongest stocks first. When they begin to appear, we will be taking them, no matter what we think about bear markets or crashes, because a system is a system. For now, it's sell cluster to sell cluster to the downside and expectations are for that to continue throughout 2019. If correct, it would mean doubling trading account capital multiple times in the rest of 2019. And that it why we are all here. 


One more week before January expiration goes off the board. It is likely we will be getting new signals before expiration, but if not, roll-overs will be suggested next week.