Thread: coolhand's Account Talk

Originally Posted by FireWeatherMet

You called it.

Now we'll have to see how sentiment reacts to today's news.

So now that the Fed is not going to taper anytime soon, how much more upside might we see? Given underlying market support is very strong, I am keeping my eye on the below chart. You've seen it before.

EMW.png

Rule of thumb: If price reaches 6% above the 50 dma, a correction can happen. If it reaches 8%, the odds favor a snap back to at least the 50 dma.

The 6% mark is currently 941.44 for the Wilshire 4500 (black arrow). You can see that when price reached this level previously, a decline was near (blue arrows).

As of yesterday, RSI is in an overbought condition, but I think it will remain in this area for a period of time (as long as liquidity remains at higher levels). We can see how this overbought condition can last for weeks (yellow highlighted area on RSI). Momentum has not reached its previous high levels from the last two up legs. So I am anticipating more upside with a potential target above 944 and possibly above 950 in the intermediate term. Now seasonality does remain weak, but that is not an issue under current market conditions. It may become one down the road, but as of right now it's not. Keep in mind we are now nearing the end of the quarter, which is likely to see money managers who have been missing this upside action begin pouring funds into the market over the next few trading days (window dressing). Things can change if sentiment gets bullish fast, but so far that remains to be seen.

Coolhand ... Thanks for the analysis. I'm enjoying reading your posts here and in the Premium area.

I didn't feel comfortable trading the Fed yesterday and decided to sit in G. What do you think about chasing the current action in C and S ... or would it be wiser to wait for a pullback ... assuming one comes!

Friend, you'll be 2 feet deep in snow before any pull back developes - the bull wants you to stay in G where there is the comfort of warmth.

Hi CH, do you consider what is going on politically when entering or exiting market? Or do base that strictly on technical indicators?

Originally Posted by DreamboatAnnie

Hi CH, do you consider what is going on politically when entering or exiting market? Or do base that strictly on technical indicators?

Generally, I do not take politics into consideration, although it could be part of an overall risk management strategy because some political events can influence market behavior to some degree. But I'd not give a lot of weight to it. Sentiment and technical indicators are largely what I use.

Thanks! I have been thinking about that.. Probably should not have gotten out on Tuesday... Even if QEHad started and market dropped. I was trying to prevent my error in June as I thought to get out before Fed talk and then when market fell, I jumped out.... Ouch! So now here I am with the exact opposite scenario, lost out as Fed news had opposite effect, and now need to find a re-entry point. Bollingers still look like there is more upside, I am considering a re-entry if it looks like a drop will occur tomorrow or Monday. I' m working to refine my strategy a bit more to use more EMAs and ignore most of the political stuff.

Hi CH.. Noticed that you use Wilshire 4500 under $EMW for discussing S fund. Isn't this the same thing as the DWCPF?

Originally Posted by DreamboatAnnie

Hi CH.. Noticed that you use Wilshire 4500 under $EMW for discussing S fund. Isn't this the same thing as the DWCPF?

Hi Annie,

It's the same thing. Stockcharts doesn't use DWCPF as a ticker.

Thanks CH ...that's good to know.

SPXI.png

I keep seeing a bearish tone among traders during the current period of weakness that the market is experiencing, but looking at the chart of the S&P, pretty much all indicators are still bullish. And the Wilshire is even more bullish than the S&P.

I think part of the reason for the current weakness may have to do with political factors now playing out in D.C. But certainly some consolidation was needed after the previous up leg too. Interest rates are steadily dropping as well, which is bullish at least on some level.

Our auto-tracker continues to see folks dropping stock exposure too, which is bullish. It will be interesting to see how sentiment comes in.