Good Evening,
We had more selling today. The charts indicated that there would be more selling and the day’s trading fulfilled their predication. Actually, when looking at it just from today’s aspect, I’m not surprised that the traders sold into the close due to the specter of more bad news possibly coming from the emerging markets over the weekend. After hours trading can be brutal when there is bad news and there is absolutely nothing you can do about it until the market opens on the next trading day. By then the losses can be deep. Since the great majority of traders do not have access to after hours trading, they sell when the risk of bad news during non-trading hours is high. The dip buyers did show up today and drove the markets higher until they sold off at the close for the aforementioned reason. That shows that there is still a large number of traders that think they can make money. They are not willing to hold stocks after hours at this time and neither am I…
The week’s trading left us with the following signals: C-Sell, S-Neutral, I-Sell, and F-Buy. Or current allocation is 10/G, 90/F. It is -2.81% so far in 2014. While that didn’t set the world on fire in January it did beat both the Dow and S&P 500 for the month. The Dow was off over 5% and the S&P more than 3%. Here are the latest posted results:
| 01/30/14 |
|
|
|
|
| Fund |
G Fund |
F Fund |
C Fund |
S Fund |
I Fund |
| Price |
14.3163 |
15.9726 |
23.2008 |
33.2034 |
24.661 |
| $ Change |
0.0009 |
-0.0138 |
0.2590 |
0.4801 |
-0.0416 |
| % Change day |
+0.01% |
-0.09% |
+1.13% |
+1.47% |
-0.17% |
| % Change week |
+0.04% |
+0.19% |
+0.24% |
+0.23% |
-0.83% |
| % Change month |
+0.21% |
+1.47% |
-2.82% |
-1.39% |
-3.53% |
| % Change year |
+0.21% |
+1.47% |
-2.82% |
-1.39% |
-3.53% |
| |
L INC |
L 2020 |
L 2030 |
L 2040 |
L 2050 |
| Price |
16.7635 |
21.5173 |
23.0686 |
24.3575 |
13.7505 |
| $ Change |
0.0284 |
0.0879 |
0.1227 |
0.1522 |
0.0951 |
| % Change day |
+0.17% |
+0.41% |
+0.53% |
+0.63% |
+0.70% |
| % Change week |
+0.04% |
-0.01% |
-0.02% |
-0.03% |
-0.05% |
| % Change month |
-0.32% |
-1.28% |
-1.66% |
-1.92% |
-2.22% |
| % Change year |
-0.32% |
-1.28% |
-1.66% |
-1.92% |
-2.22% |
After reviewing the charts, there are two scenarios that can take place from this point forward:
Yesterday a short-term bottom was formed as price broke out above a very steep down trend. With this new bottom in place, we can draw a new rising trend line, which coincidentally is parallel with the rising tops line that was part of the rising wedge. This forms a rising trend channel, which helps us estimate upside targets, assuming that price is able to reach the top of the channel.
“The rising wedge formation certainly fulfilled the expectation that it would break down. The steepest side of the wedge usually is the least sustainable, and when price breaks down, it allows a less accelerated (and more sustainable) rising trend to be established.
So the head and shoulders is still a viable scenario, but the rising trend channel is now a more bullish possibility.
Conclusion: My expectation is for the market to move higher. The options: (1) right shoulder forms lower top, or (2) move to new all-time highs within the rising trend channel. The indicators will support either outcome.”
The chart is courtesy of Decision Point.com and the analysis is by Carl Swenlin. While I have access to charts, I do not currently have the ability to diagram them and it is hard as heck to explain what’s going on without it so I use Carl’s charts when they agree with my analysis. I must add though, that Carl Swenlin is one of the fathers of technical analysis and very much more qualified than myself to do the analysis. I want to make sure he gets the credit for his work. Should you choose to do so you can gain access to his web site for around $20.00 per month. Well worth the price. Anyway, as he noted the Head and Shoulders pattern is still in play. It can be frustrating, but these things just have to play out in order for us to know with some certainty which direction the market is heading. Viewing the possibilities now allow us to make contingency plans for each outcome and shows us which charts in particular to focus on. That’s enough for tonight. Clear as mud, right? Actually, it is quite clear and if you don’t know how to follow the charts just yet just keep paying attention and you’ll learn to recognize every thing that we’re talking about in short order. All that said, I would be amiss not to say that the Lord is my safety net so I don’t really worry about what might happen. I just trust Him to watch over me. He has never let me down and I mean not even once. And yes or course, I mean in trading stocks! May He continue to bless your trades. Have a great weekend.
God bless, Scott
