Joined Apr 1, 2010
8,861 Blog Posts
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Well, that was fast! You’ve helped me a lot by your teaching about price action, and the importance of being respectful of it. The IYR is quite interesting– Fidelity showing “115%” short interest- go figure. Combine the short squeeze with the potential of short term spike in housing with the foreclosures locked up and it could get fun. Not convinced that semis won’t lift off at some point too since so much of this increase in the mkt seems to be a mirage.
Excellent analysis Chess. Gives a great perspective on the underlying areas of strength in the market. It will be interesting going forward if many of these sectors best their April highs. If that happens, I expect the 1200 area of the SP500 could become a replay of the 1150 area – except with a different outcome. The 1150 area of resistance was a great example of traders using that level to get short not realizing or refusing to accept they were becoming the rocket fuel for the market to power through that level. Also, many new longs got shaken out with the 1130-1150 choppiness only to become frustrated buyers/chasers after the break. The reason I say the 1200 level could play out differently is because the recent psychological conditioning of traders at the 1150 area may cause them to play it exactly opposite (memory/pain avoidance) at the 1200 level by getting long at exactly the wrong time while newly timid shorts close positions with a slight break above that level and the market once again frustrating the greatest amount by correcting. The timing could also be right as this scenario could very well coincide with a post election excuse to sell the market.
Just crystal balling it here but I believe having these short-medium- and long term trading frameworks has given me the most success so far – with the caveat being that frameworks are only as good as the success they produce and should quickly be abandoned if the facts say otherwise. I have learned this from you and Scott through this run (trade what you see) and am grateful. To have been freed from the perma-bull\perma-bear trading psychology has been liberating and has reenergized my love of trading.
Thanks for being a big part of that.
“the potential of short term spike in housing with the foreclosures locked up”
wow.
Great vid as always. Doesn’t the price action make you want to buy just about everything (with a few exceptions)? It does for me.
Ha. We shall see next week my friend.
Chess
Awesome videos! You make a great point. Price action has to be respected. It is the end all result in investing. The weight of the evidence now clearly shows that the market is in an uptrend. Thanks for taking the time for this.