Cycles analysis is not a good timing indicator for picking tops, but they are helpful in helping us determine when to step on the gas or to tap on the brakes. We managed to hold the last of the NQ positions we were in until finally getting stopped out Monday. I am not going to lie.... it hurt watching the NQ move above 10000 without us but I knew the cycles were nearing a time to move into a half cycle low. I had a few traders that gambled with adding some new positions but with very tight stops thankfully.
Where we go from here is not very clear. I was expecting this to be an HCL but could this be something far more dangerous? If a cycle peaks before the half cycle low, it left translates. Most cycles in a bull market peak towards the end of their cycle and are right translated, but it is possible that this cycle just left translated. We cannot know this for sure at the moment so we have to be cautious.
So for now, I am proceeding with caution on the stock trades. I may not recommend a stock trade at all. Cash is a position, and if this turns out that stocks are moving into an ICL already, I think we should get excited about the opportunity to ride a new daily cycle out of an ICL. That won't be for probably another 3 weeks however.
One of the biggest beneficiaries out of the demise of stocks has been bonds. I had a couple people asking me about shorting stocks which I don't do. I said that buying bonds would be the closest thing to shorting stocks I could do and that turned out to be accurate. Bonds had a huge day today as you could imagine they would after such a horrible day in the stock market, but this has also caused them to reach oversold on the 3 and 5 day RSI. Price is pushed up against the 50 DMA which is likely a resistance area. We could see a small pull back. A small one. I have raised the stops on the bonds to 176.
That said, you don't just exit a winning trade 5 days into what I believe is a new intermediate cycle. The easy money may be gone but there are a lot of reasons to hang onto the bonds for now. For one, the Commodity Channel Index gave a rare buy signal just 3 days ago.
The weekly chart has yet to even begin turning up the stochastic indicator at all.
So for now I am satisfied holding onto a winning position that still has a lot of potential for substantial gains as we move closer to the time of year when bonds perform best. This is a better position to me than moving into cash.
I don't have much to say about metals. Here we are stuck holding through more grind. I really thought it would be different this time. I know we are feeling like there will be a big reward at the end of all this. The bounce in the dollar probably did not help stocks or the metals. Oversold CCI on the dollar usually means a trend change, so I believe we need to pay attention to this.
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