Bungee markets. Don’t jump….

Posted on Mar 06, 2018 by in Letters

http://schrts.co/5EikRY

Enjoy the view.  You are looking at history.  Thousand point days in the Dow, doubling and tripling volatility and trucks backing up to the market to carry away the profits of computer programs.  High frequency traders clearly caused much of the volatility.  Here is the way it is done:  program monitors market and sees that irresistable momentum is developing and goes with the trend — mostly short here.  It was easy to diagnose.  All you had to do was watch the rhythm of transactions.  Seamless trading without a pause tells you that the machines are doing it — along with some experience in computer trading of your own.

At the same time, the effectiveness of short term manual trendlines is notable from the chart.  The natural development of  the pattern was aborted by the trade war commander in chief who nipped a recovering wave.  According to reports Trump came unglued and tried to create a one man trade war.  As everyone knows, news does affect the market.  The creator of world news has evidently been contained by Congress now, but investors should  be alert when Trump is not on his golf course. (Encourage him to golf more.)

We maintain our bullish stance but we wouldn’t be adding on until we make new highs.  Too much uncertainty.  We have scurried from yen to yang and are now in radically reduced positions, but consider the basic trend likely to resume.

A close up of the volatility.  Long for very short term trading purposes.

 

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