MARKET POINTS: by Woody Dorsey: As previously noted, the U.S. Equity Highs of 5/20, 6/22 and 7/20 traced out a Topping Process which has been revealed as Significant. My profile for Black Holes (Negative Price Magnets) allowed for important declines. Investors did take my advice of a few days ago, “Do Panic.” Isn’t it amazing how little attention is paid to Market Psychology! Markets are always Irrational. There is nothing wrong with, “Irrationality!” The Psychological component is the least understood aspect of Financial Culture. This “Lens” is the “Missing Link” in Markets. Study your Psychology! This is where and when the bounce is due. Here it is.
Woody, You hit the nail on the head with your 8/18 – 8/24 Kill Zone call. On Tuesday sold all my stocks early in the session and bought 3 SPY at the money Puts. This helped pay my monthly subscription fee as I am currently up more than 400% and $40,000 on those Puts. Chuck W
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BLACK HOLES:Yes, recent trade is typical “Black Hole” Behavior. But, the Black Holes I have been forecasting are not due now. The Dorsey Market Sentiment has had a string of negative readings of 0%, 1% and now 6% Bullish today. I noted that it would not be surprising to see “multiple very low sentiments in the weeks and months ahead.” It would be normal to see some Big Bounces within this still overall negative environment.
TRADING THE DOWN TRADE: Repeat: “If you are a very short term trader (whatever that is) and you have made more money than ever before in the shortest amount of time than ever before, you may want to pocket some profits.”
My short term idea was: “Near term profiles allow for a 1.5 to 2.5 day pop and might represent, based on the degree of decline, a large point move. A guess of sorts is that such a bounce may occur from maybe mid Tuesday or Wednesday morning into Friday.” Again, “This Weekly Reversal is important and will be noted by Investors. Note too that by month end, we will also see a significant Monthly reversal! These Reversals in Weekly and Monthly History seem to be and, will be seen as Beginnings rather than Endings.
I wanted to send “Thank You” note to Woody and Gary (and Sentiment Timing Team) This has been a trading environment and I would not have been able to navigate without your guidance. I took positions by selling Call Credit Spreads this time to be safe (and very few directional trades) I made 30% plus on my small account in a week. This means a lot to me, thanks so much again. Mukesh K
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MORE MARKET POSTMORTEM:The 94% Bullish Sentiment reading on 8/11 identified the 2105ish area as tactical Resistance. The profile for the “Kill Zone” has been notably borne out. My comment on 8/20: “It is now seen that the Market Psyche has changed.”
THE NEXT TELLS: My profiles for months in the EEM and XLE Told of generic market Vulnerability into the Fall. I am looking at profiles for Capitulations in those areas to time the Generic Equity Low. I think I know where to look, time and price wise, for interim Equity Lows in concert with Crude and EEM.
INTERESTING MARKETS:Two Black Holes remain due this year. I allowed that this double indicant for weakness may result in a Complex Compound Correction. This will not be an easy market to navigate. The question remains: What Degree of Decline is this? The entire rally from 3/2009 is starting could be corrected.
MARKET SUMMARY:Enjoy this Market Reality. No one knows what is going on. That is a good thing. Everyone thinks they understand Markets. That is not a good thing. It is what it is. They all will love some up days.
Woody and Gary, Thanks for guiding us and communicating so much during these crazy market times! You help us maintain our wits! Becky M.
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