Use this post in conjunction with this other one here.
In a recent post, I discussed the huge stock market Dec low, and I discussed how that should set up – the advice done WELL AHEAD OF TIME – but I also noted this, with the specifics in the post:
“we have had an outstanding broad-based rally, and are starting to close back in on a big res area”
Below are several charts, market movements are a process – the low, the PS, the lower lows, the downside/left side of accum, the upside/right side, the SOSes, the follow thru, the bko, the uptrend and then the reverse. And the overall TIME-FRAMES we are dealing with play a very important role. The stock market is in a secular uptrend, with a huge intermediate accum area, and a terminal shakeout of that area, there will be more retesting of both the low and the high.
I am posting several charts below. That res area was clearly marked last year, with arrows for subscribers and is continuing to play a big role. In those charts are my discussions. The Russell is the index, to me, which leads, both up or down. In the top last September, the IWM began lagging and topped before the popular indexes. It had been leading in the huge rally out of the Dec lows. On 2/27 I started getting cautious, chart below, why? – the IWM was starting to lag, and the volume on the IWM specifically? Chart below. Relative volume is very important to me, as are the close of the bar, and where we are located with that, as is the most recent short-term support (resistance) area, as is what are the leading stocks doing, how are setups doing, how are bkos working/follow thrus.
There is a jobs # coming up, then a Fed meeting, and trade tariff news, plenty to cause “erratic”/(trading) movements – upthrusts and springs for short-term entries and exits. I take these into account, but stick to my work, for any PROCESS unfolding – THE PROCESS is extremely important to me. I do not allow anything to change my view of that, springs and upthrusts are a PART of the process. My approach to analyzing situations is also a process. Unlike most people, I don’t get (wildly) bullish or bearish because of one thing, it’s a series – a process – caution about the trend in force (up or down), then concern, then I get bearish (or bullish after a selloff).
And I employ a method which took years to develop which allows me in the vast majority of instances to be able to recognize the top or the bottom real close to the inflection points. Plenty of info in those charts – RELATIVE volume, red. There are short-term and longer time frames to consider. Normally, at a big res area, a backup is completely normal, it’s all about the relative volume, where it comes in, and how that relates to the most current short-term important supp. Study the August/September top last year, you should be able to see things in there. Also, trading short-term, with options, I take PROFITS and use stops. I do not make predictions and assumptions, I use rules.
The low in the stock market in December 2018 was a major technical spring in a huge trading range/accumulation area in an ongoing secular bull market. This was discussed here way ahead of time in a subscriber post from 11/14/18, and this is how it played out with the break in December, a major spring (shakeout). So as we have had an outstanding broad-based rally, and are starting to close back in on a big res area, what did I say back in Nov about how a major low would play out:
So bit bigger picture, plus near term, we have the total bickering fighting investigating power grabbing for the next 2 years and beyond actually with the new crop of clowns into the Congress, that setting the stage for consistent volatility in markets, along with the higher yields, tariffs, and then oil getting clobbered. A traders stock market. None of this will kill the secular bull, I discussed a lot of this stuff over the years, have expected the general tone and trend of where we are headed, was aware of these types of things when I did this post many years ago as to my extreme bullishness for the long-term stock market. That belief takes into account a USD losing at least “unofficial” reserve status.
And near-term, the stock market does not like rapidly falling or rising crude oil, so a rally in crude, a bounce in JNK would provide another rally opportunity in stocks. Crude put in some very heavy volume at the lows yesterday, (#1 EA only) last chart below.
Sort of intermediate-term, the way this bigger area sets up to me in SPY is we have got to have a big rally out of here, up to the 281 big bko area, and then another big selloff, maybe another spike lower low spring, then we should have set up a lot more stocks in the meantime.