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Trading the Bounce

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There are lots of articles appearing comparing the 1968 market to the current market (for obvious reasons).



Plus ça change, plus c'est la même chose.

jog on
duc
 
Tech. running super hot.



The Tech. sector has its 50SMA crossing the 200SMA while the broader market lags behind still waiting for the 20SMA to cross. Tech. when it pulls back will pull back to the 20SMA. As other sectors' 20SMA cross the 200SMA, we'll have a broader based pullback. This will not invalidate the 'new trend'.

The 'Bounce' is dead. Long live the Trend.

jog on
duc
 
Fwiw, i expect a pull back today/tomorrow (US) and have setup a short fuse in my weekly systems which will be installed by Monday
As long as we are not crashing today, i should be able to carry on trading the bounce/new trend without too many stomach cramps.
Crossing fingers .
 
NDX has met all upside projections reaching the yellow projection range. Only 2 things can happen here, 1/ It reverses trend 2/ It stays in this range until other indices reach their respective projection ranges.

Having said that the SPX can turn down without reaching it's range cross the offset lines that gave the projection, and invalidate the upside projection.

Dynamic Cycles show a strong bearish divergence on the Trend indicator but more importantly this market has reached an "extreme" on the upside reaching the 3rd standard deviation of the average % price excursion from the pink line. I have placed arrows to show how the market has reversed trend in previous instances when reaching this important extremes. All that remains are the weekly sell signals to form, however
today the NDX has printed a bearish engulfing candle...








 
The current XJO wave count suggests we are approaching a completion of this rally(or at least this leg up). It is a whisker away from entering the 10 Week cycle projection zone. It should be noted the 20 week cycle has substantially higher projections that have not been met.
All projections generated by cycles must be met or invalidated, so for the 20 week cycle invalidation price action must cross back down below the 2 offsett line. It can be seen that there is quite a big space between price and the trough of the 2 offset lines in the 20 W cycle so it would take quite a big move to invalidate it.
My 2c worth is that the market will correct after meeting the 10W cycle projection. If it holds up above the 20W cycle offset troughs we might get another leg up but for now i am eyeing a correction although I have no sell signal yet in the weekly or daily dynamic cycles. I will post these when they generate.





 
Low close off of today's busrting out of the gate, could be an indication of a high being in place. I'm not in front of charts, but I'm estimating we're just a tick over a 61.8% Fib. retracement level.
 

The bounce was never a bounce...unless its premature to say at this point.
 
makteb said:
It was not a bounce
Click to expand...
That partly depends on how you define "bounce".

If I drop a basketball well then as we all know it will bounce but due to energy loss (getting into physics here.....) it won't bounce to a height higher than that from which it was released assuming that the only downward force was gravity (that is, I let it go and didn't throw it down).

So long as the ASX is higher than the low and hasn't exceeded the previous high then it remains possible that it's a bounce using that definition of it.

That is of course being rather pedantic on my part.....
 
Rudyard Kipling would be proud of you all. I have no idea which way the cat bounces. Betty takes a Shi7 most days is my guess.
 
Yes. The yanks were always going to have a 2nd wave as they never contained the virus in the first place but it's come far earlier than it should have on account of the george floyd death. I've nuked all non-stay-at-home positions. I was expecting a correction but not this early and nowhere near this quickly but I've effectively been black swanned by the george floyd riots. I've done two months of gains literally overnight.

About 40% of my position is now in zoom - about 5-6 weeks ahead of what I'd scheduled.

On the ASX I bought qan/syd/web/flt/aia at about 11 this morning and made about 3% in just a few hours. Aus has contained the virus and will reopen pretty soon as well as its size meaning it has a significant domestic air travel market (unlike NZ). There's also the talk of a travel "bubble" with NZ on account of them having contained the virus entirely and I fully expect that to happen. Combine that with AU being such a large chunk of NZ's tourist numbers and AIA should shoot up nicely.

Even if there's more cases from these stupid protests, I'd just buy in once that hits the news. AU & NZ are primed for a reopen. USA is not. USA is actually now the epicentre (yes, really).

Brazil is going to be absolutely obliterated by coronavirus so I'm both long and short on fmg/rio/bhp, but the smart money figured that out weeks ago - this is just a dip for the miners.
 
Last edited:
RazzaDazzla said:
Long and short?
Click to expand...
No increase is ever linear - there was a dip to buy just today for example. Mining stocks were always going to get hit despite the domestic coronavirus cases actually having very little to do with their market.

Dunno about you but with a position like this I'll never sell/buy the whole thing, I'll leave say 50% untouched and play around with the other half trying to pick dips like what was obviously going to happen today.

We can now expect a bounceback as everyone realise that one coronavirus case in victoria isn't exactly going to effect the chinese iron ore demand much.

There's also all kinds of other funny business like how the chinese still produce steel flat out even when there's no market for it and then dump it in sports stadiums when their storage yards reach capacity, but that's probably beyond the scope of this thread.

There's all kinds of funny business like that that those in the iron ore business know occurs all the time.
 
Now that I think about it, if you were confident of more coronavirus cases coming from the protests that have both already occurred and are going to happen this weekend, you could do the same with aviation/travel stocks. Longer term they ARE going to increase as au/nz WILL reopen, but we can expect some decent dips like today if the protests spread any more cases. Longer term, they're not going to stop a reopening, just delay it. Short, there's big dips like today - assuming there's more coronavirus cases, of course.
 
That was my thinking too and thought it would be a good shorting opportunity on Iron Ore stocks like FMG a few months back. Got that call totally wrong and would have been in a deep black hole losing a whole chunk by now !
 
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