It is the first small step actually getting short something (the S&P 500) even though if my long-standing target of 2410 comes about, it will lose money before it pays out. The position comes nowhere near offsetting longs (on which I continue to slowly take profits) but I am trying to have discipline on my market plan, just as it took so much discipline to remain bullish from the depth of Brexit through every mini or maxi hysteria since. That plan has called for SPX 2410, NDX 5500 and Dow 21,000 “by March/April” with massively over bullish hubris in play. We’re getting there.
The bullish discipline since last summer held because SPX 2410 had not been negated and now, lo and behold, everywhere I look less experienced investors and/or experienced substance abusers are taunting the bears and a market that is simply rising to a target laid out for NFTRH subscribers last summer is simply doing its thing. Why get hysterical?
FWIW, this is NFTRH 434’s opening segment…
Anybody can subtract one number from another and then add the difference to the higher number. Welcome to the mysterious world of pattern target measurement!
I would think most people can spot patterns as well, although some of these things just register with me because I have had a lot of years of experience seeing them and noting their tendencies. Patterns like the one that showed up on the S&P 500 last year, after it negated its topping structure, have often preceded grand new highs. Look no further than what gold did in 2009 for reference (see charts of SPX and Gold below).
But the greater point I want to make is that nobody can predict the markets with pinpoint accuracy. There are plenty of tools (like those we use) that will help define probabilities, and the longer-term your view (over years), the easier it is to one day claim ‘See, I was right!’, but during the market’s weekly and monthly march forward nobody has got the answer; especially those nobodies who claim they do.
So with that preamble out of the way and as the S&P 500 steams its way toward the 2410 target, let’s remind ourselves that it is just a simple measurement by a simple technician. It can fall short or it can, in a blazing flash of glory (and greed, hysteria, mania… ) slice through the target like a hot knife through butter. But whatever, it is approaching.
The SPX pattern was a topping structure that rolled over and made a lower high and two lower lows, at which point we became aware that a bear market signal was in play. But the early 2016 recovery (from unsustainable over bearish sentiment) triggered two moving averages that had been very relevant historically, into a bull signal. The pattern then tested lateral support and the weekly EMA 50, and the rest is history. It measures to around 2410.
Gold made lower highs and lower lows as well into the depths of Armageddon ’08 (as we were calling it, somewhat tongue-in-cheek, at the time). This pattern measured to 1700 and gold eventually ticked the 1900’s before its bear market ensued.
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