Time To Act

 

The market has been a bear to trade the past few years as it worked its way to a multi-year top. The topping process was hard enough but throw in the advent of computerized trading on a huge scale, with the bond, currency and equity markets being pushed around by program after program hitting the markets on AI scanning robots, and we get exaggerated and unpredictable moves in both directions. Until something happens on a macro level, why keep on fighting the war? 

Fortunately, we don't have to answer that question because something has happened on a macro level: Enter stage left, the long awaited bear market. 

We have unequivocally entered into a bear market which at its minimum will duplicate the 50% haircut the S&P 500 incurred in the great financial crisis of 2007-2009. At its worst it will match the technology dot.com crisis of 2000-2001, a devastating 80% Nasdaq crash. It is no longer a question of when, it is an answer of NOW. 

The underlying premise has always been and continues to be that the next bear market will present us all the opportunity of a lifetime. Our evolving trend trading stock options trading system has been crafted with this particular bear market in mind. It is now in its element: The beginning of a strong new downtrend and within which there are ongoing and outstanding trading opportunities in intermediate and shorter-term trends. Cases in point: On November 12th we had 13 Sell Signals, on December 3rd ten more. This is not the ordinary signal generation, this is the extraordinary signal generation. Into the days and weeks ahead Sell Signals will generate quick 100%+ option gains, only to be followed up with repeat Sell Signals with their own 100%+ runs. 

The proof is coming, so if you want to sit the first few signals out, be my guest. But wait, we already have had the first few signals, i.e.,  the Nov 12th trades, the Dec 4th trades. This is what is ahead for the market and for trading the trend with our signals and profit taking strategies. 

 

Above is a longer-term S&P chart with the first few labels of an EW five impulse wave down move. The red arrow is not exact, but it does nail the direction. 

This chart zooms in on the action over the past year and illustrates why I am so sure we are headed lower, and a lot lower. Note how prices couldn't reach the top channel line a sign of weakness and a prelude to a hard down market in the months ahead. We have waited a long time for this move, it is finally here and it is time to act. 

If you don't have the time nor skill in trading options to take advantage of both the bear market and the trading system, find someone who does. I will walk them through it (for the price of a subscription, of course). Blue Line Trading is a newsletter only and does not manage accounts. If you need help in this direction, send me an email for a personal consultation: apharris@mac.com. 

 


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