By David Grandey
All About Trends
Our market has been running for 8-plus months now. Eventually all markets go into corrections. We are not saying it’s going to right now but we are seeing a lot of potential kinks in the armor if you will. In fact the bulk of what we are seeing are short side set ups and that tells us something. It tells us to pay attention.
Above is an interesting chart. As you can see our current market climate is looking strikingly similar to that of the minor correction in June-July.
Notice in the first blue box how while in correction the RSI and the full stohcastics never really made it over the 50 level? That’s what happens during corrections. Next week we’ll find out it we retest the highs or we fail. If we fail then it’s heads up folks on the short side and we want to hit it hard in that department. We’ve already started taking positions in that department not in anticipation but because of what we see with those specific chart patterns.
So why are we getting bearish? Because the two charts below tell the story with regards to trends. It’s all about the blue lines in the charts below.
With each of these could we retest the highs? Sure, but any retest is still a backtest of a broken uptrend.
Volatility is on the rise, so from here on out its going to get real interesting. After all we’ve just ran for 8+ months with only a minor correction.
When an intermediate term correction rears its head it’s a huge money maker on the short side. Of course your long only traditional Wall Streeter won’t tell you when an intermediate term correction is on the way because then you’d take your money out of the fund and they can’t have that now can they, they need you as a captive audience in order for them to survive, but you all know better now right?
You need to be prepared so you can not only can get out of your long positions, but can profit from the correction via short-sell exposure or long positions in bearish ETFs.
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