We are told that the market has now traversed 42 days with out a move exceeding 1%. And, furthermore that 82 weeks have passed since the Dow touched the 200 day moving average. Naturally this makes traders nervous, as they feel they are skating on thin ice. Given the number of black swans paddling about the lake we never trust the thickness of the ice. That’s what stops are for. We have just recomputed the long term trend stops for the major indices: here in the SPX 1706.80.
Though not as robust as the SPX the INDU remains crucially important. Stop 15360.82.
These are huge stops, it goes without saying. We diminish the risk in our personal accounts by hedging when upper trendlines are broken and we always inform readers when we do that. We have made clear that that tactic almost always loses money, and that investors who sit grinning quietly at the temporary losses do better in the long term. And there is no reason to think the bull market is over — despite the pundits and talking heads who are as always in a frenzy of top chatter. They have to do that. They have to sell papers or magazines or eyeballs. Running naked down the street (Wall Street) screaming the sky is about to fall is their way of getting attention. God forfend they should happen to accidentally be right one day. We would ever hear the end of it. On the other hand their clueless market calls are quickly forgotten, buried by their new predictions. But they are amusing, aren’t they?
The COMPQ basing point stop is 3730.09. We are long the leveraged Qs.
We are also long leveraged gold and silver and short the FXE. Today all the sectors of the S&P are throwing off buy signals. Throw a dart. XLY FPX, XLB, XLF, XLI, XLK, XLP, XLU — take your choice. But enter small and put a stop back 4 or 5%.