Where is Madonna when we need her? Oh, right, in the creche. What we’re praying for is a trendline. This wave is without a valid upsloping trendline. So we went to our bag of tricks to create feasible stops. As our knowlegeable readers know we must have a Basing Point to base a stop on. But we have not had a downwave since October. That alone should make searchers after the Snark nervous.
So we calculated a New High stop. Taking the low of the high day of the wave, Nov29, 1803.98, using a 6% filter we found a stop at 1695.74 (marked on the chart. As always New High stops make us nervous because they pull the stop up so close to market prices. But, it is what it is, if not what it is not. (Suzuki roshi would smile, as would T.S. Eliot.) Whether the market god will smile or not remains to be seen.
While there is no valid upsloping trendline it was possible to draw a couple of horizontal lines. If you were very nervous you could use them for hedging. Remember, we told you that patient and centered investors make a lot more money that hedgers and traders.
But as always, possessed of happy feet we closed our gold and silver shorts encouraged by a $30 dollar gap in gold. In IWM a short term trend line was broken, so we pitched that one too. Leaving us with a mature position in the UPRO (leveraged SPX) and positions in the Qs. We added on to our UPRO position, which provoked the downdraft we are seeing today. No good deed goes unpunished. But we wouldn’t be taking on any new additions until the present choppiness is resolved.
Remember the Foodbank. A small donation goes a long way for kids who are seeing Congress cut back on food stamps. Too bad there is not a way we could refuse to feed Congress.