The kiss of the death cross…

0812indu50200

http://stockcharts.com/h-sc/ui?s=%24INDU&p=D&yr=1&mn=0&dy=0&id=p90850879542

The kiss of death is not the death cross.  The kiss of death is believing all the unmitigated b.s. which flows out of Marketwatch and all the other media like the EPA spill polluting Animas River.  To belabor the obvious the so called “death cross” is the crossing of the 50 day moving average over the 200 day moving average.  Chicken Little is, as expected, worried that the sky is falling.  He better worry about China falling and landing with a thud on our markets.

And he should be more worried about the pattern here than the death cross.  The Indu is in a clear downtrend with lower highs and lower lows.  And as we have been pointing out there are hardly any trendlines it hasn’t broken — including the dreaded trendline from hell, mar09.

Shown below is the long term Basing Point perspective on the weekly Indu with a stop at, surprise, 16108.12.

Screenshot 2015-08-12 10.54.15

(sorry, no link for technical reasons)

But the stop can be seen as well as the trendlines from mar09, oct14, and sep11.  The truly patient can sit on their major positions waiting to see whether the stop is hit.  Sometime back we discussed hedging.  That was a fortunate discussion for those who followed that tactic.  We are mostly out of the market, but some of our Basing Point accounts are feeling the pain.  Big money will flood the market when it thinks this downwave is over.

Is this the beginning of the avalanche?  We are inclined to think that this will be a limited downwave, but NOTE this is an opinion.  Readers must make their own judgements and act according to their own risk tolerance.  The SPX may be leverage hedged with SPXU, the Indu with DOG.  Remember, there are implications to using these instruments and you would do well to inform yourself as to their pros and cons if using for more than a very short hedge.

 

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