Stops. And esoteric technical arcana…


Email pours in from friends, students, readers, colleagues.  How did the market know where your stop was (9729) and know to stop just above the stop.  (Stop us if you’ve heard this one.)  Do we like this stop? No.  We set it back in December from a congestion pattern.  We actually think it should be set using a Basing Point from February, which we have illustrated here with the lower horizontal line of 9408.88.  In fact that is the stop that is generated by the weekly Basing Point system.

Here is the knotty problem (as in esoteric arcana).  Magee promised to shoot us if we ever moved a stop down from its original placement.  So shoot us already.  Readers must make their own decisions.  We offered readers a stop back in May (calculated by Variant 2 of the Basing Points procedure) as illustrated by the asterisks.  (Don’t we all wish we had done that?)

We would be sympathetic of whatever decision readers made, as we consider that a technical case might b made for both.

2010-07-01-spxThe same considerations exist for the S&P, except if you are going to take the upper stop you must watch to see the close tomorrow and take it if it is under.

2010-07-01-qqqqIn the Qs  the stop is 40.99 — that is still some distance down.  Now here is an interesting consideration.  As we proposed in the 9th edition you must have a concordance of the three indices to have a signal — so there is a divergence here in the major indices.  but don’t use it as an excuse not to make a decision.

Stay tuned.  We may post a letter during the session tomorrow.

And remember.  As an old trading partner of ours used to say when the going got difficult, it’s only sex drugs and rock and roll.

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