As Ripley used to say –believe it or not, and it is difficult to believe, but the March rally is intact, and so is the wave pattern.
A new high has just been made, and the head and shoulders pattern (which everybody in the world saw) has proved to be ineffective. In chart analysis the stronger method, we believe is wave analysis — partly because we are its main exponent, if not derivative. Wave analysis proves over and over again to be the most powerful method. In this most recent example the thing to do was wait for the March wave to crest and then wait for the downwave in order to find a Basing Point and set a higher stop.
Instead (speaking personally) we saw the head and shoulders and short signals and chortled and got ready for the renewed crash. Too clever. The rule is wait until the neckline is definitively broken. Too clever by half, as they say.
Recently Mark Hulbert noted that Dan Sullivan, one of his top newsletter writers had reversed his field from short to long. This is indicative of market crosscurrents and choppiness.
The Magee Basing Points procedure (Variant 2 — see StairStops book) is long this market. We are personally long a number of issues we bought at the bottom — among them the famous lottery tickets. We are still deeply suspicious of this market and would either adopt extremely long term positions (more than 5 years) or extremely short term (five minutes –just joking). If you did want to get long we would watch like hungry buzzards ready to fly the coop at the first sign of trouble.
We will be watching closely. We got your back.