Thursday, April 21, 2016

Apr 20 - the longer term bullish case

Although short SPY for short term (1-3 days), it is very possible that we are going to see equities go much higher than they are now.  DIA and SPY have cleared to ATH and there is possibility after a potential small pullback we are back off to the races.

Courtesy of Sentimentrader, one of my favorite resources out there.  This table captures what has happened historically when we see a sharp, major shift in price from lows to highs.  It has a 100% bullish outcome over 1 mo period.  I have looked at this pretty carefully and feel hard pressed to push intermediate term shorts now.  The last 2 weeks have brought out the possibility that we are seeing a long term trend change and that the past year was just consolidation.

 VIX near its zone of 12 where we have seen equities pullback.

 Something different is happening though.  The last downturn the NYAD didn't break up and out like it did now.  This posits that we just completed consolidation
Previous long term negative divergences 15 years ago set up a bear market.
 Here also.
 But not now.  The set up failed and RSI crossed the declining trendline.  I had expectation that it would touch the trendline then go back down but it has definitively broken above it.
 We might be heading into a ATH orange box as happened several years ago.

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May 15 - Closed out IWM puts for +120% and picked up DAL and HD Jun calls

I'm going to let the market do its thing this week and probably stay away from new positions until Friday unless something very good pop...