Stock market tops are tough to trade and
time. That is because there are so many things happening in the media
and emotions running wild that it's tough to get a grasp on what you
should really be focusing on to keep a level head trade around it.
Market tops are typically not an event but
rather a progression that takes much longer than most individuals
expect. I still find myself jumping the gun at times and I know this and
have been through this process hundreds of times in various
investments. The human brain is a powerful tool but emotions can force
you to override your rules/strategy still.
Stop Fighting! - Bulls & Bears are BOTH Correct at this Stage
It does not matter where you go to get your
stock market news and reports... Everyone is arguing their bullish or
bearish case more than EVERY. There is a reason for this and it's
because the SP500, DJIA, RUT and NASDAQ appear to be entering a cycle
top. What does this mean? It means the uptrend is almost over from a
technical analyst point of view, and those who are have been bearish for
a long time feel the market topping out more now than ever in their gut
that this is the top.
Keeping it simple removing news, economic
data, emotions and biases we are left with one thing which is technical
analysis. This is based on price alone and that is important to remember
because the only thing that pays you money for an investment is when
price moves in your favor. Believe it or not price only has blips on the
charts here and there which is based off news, economic data etc... In
the big picture stock prices tend to lead economic data by several
months and in some cases years.
So the big question is this... If price
action is the only thing that pays you when trading why bother worrying
about all the other opinions, news out there. That stuff only adds to
the confusion and in most cases gets you on the wrong side of the
market.
Timing the Market Top Conclusion:
In short, from a technical point of view
the SP500 remains in an uptrend. But according to technical analysis the
upside momentum is starting to slow. If we get a few more down days
then the trend will flip and be down but it has not yet happened.
When the trend does reverse down you must
remember that 80% of the time price will bounce back up to test near the
recent highs before truly rolling over and collapsing. Think of it like
a zombie movie. Just when you think you killed one it comes back to
life for one last scare before its dead.
Just to touch on stock market bottoms so
you do not get confused. Stock market bottoms are little different than
tops so they are traded differently. I will cover them when the time
comes.
Trading the market is not easy during this type of condition, which is why members and myself got long SSO on the 23rd
and two days later sold out for a 3.5% gain. I am now looking to reload
this week for another bounce/rally play but only time will tell if we
get another setup.
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VMW has formed a solid support at $70 (navy), which would also be a
52-week low breakdown if the stock breaks below it. In addition, the
stock has formed a potential trendline of resistance (blue). These two
levels combined have VMW sandwiched within a common chart pattern known
as an descending triangle. At some point, the stock will eventually have
to break one of those two levels.
Today
billionaire Eric Sprott told King World News the reason why a massive
panic is coming and what investors can do to protect themselves. Sprott
also spoke about the non-stop financial chaos central planners are
faced with “24/7.” This is the second of three written interviews with
Sprott that will be released today. Below is what Sprott, who is
Chairman of Sprott Asset Management, had to say in part II of this
remarkable series of interviews.
Back in 
South
Africa’s rand punched through the psychological barrier of 10 to the
dollar as investors flee countries with big current account deficits,
deemed most at risk. The country’s central bank said it would take
action to stem the fall in the rand if moves became “abrupt and
disorderly”.