On Wednesday, October 13, the S&P 500 hit an intraday high of 1184. To close out this past week, the S&P printed 1183 into the closing bell on Friday. Thus, despite all of the price swings and declarations of a major market top over the past two weeks, that familiar phrase of “correcting in time, rather than in price” continues to be the axiom du jour. Subjective analysis is inherent in all human beings, but that does not mean you should blissfully ignore its existence. Instead, a self-reflexive nature about any bias you may have with respect to the market will often enable you to conduct more constructive analysis.
As an example, let us take a look at a daily chart of the S&P. You will notice that there are both bearish and bullish ways of drawing trendlines, which one could neatly fit into a respective bias.
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Despite how plausible of a case the bear or bull could make here, we must simply look at the facts. Undoubtedly, the trend since early September has been higher. Bears looking to call tops for anything more than a day or two have been badly hurt by Mr. Market during that time. Until we see some evidence of that phenomenon changing, the presumption is that any period of consolidation and chop will ultimately resolve to the upside as a bullish continuation pattern. For some time now, I have said that a sharp 3-5% correction would come to fruition. However, that could just as easily transpire now, as it could at 1250 on the S&P. Therefore, the safer bet is to err on the side of the prevailing trend.
Below, you will find my top setups for the upcoming week. Feel free to pick and choose whichever ones best fit your style. Please keep in mind that these are trading ideas only. I also urge you to use stop losses in order to mitigate your downside risk. In general, I prefer a trailing 7-8% stop loss, unless otherwise indicated on my annotated charts.
I hope you find these ideas helpful.
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Hi
I just want to stop by and let you know how much I enjoy reading your Tweets and Blog posts. There is a ton of noise on Twitter and you are one of the few who posts solid well thought out setups…Its all about quality and not quantity and your analysis is superb.
Thanks for sharing it with the rest of us.
Bruce
@lasertrader
Bruce,
Very kind. I appreciate you reading and your feedback.
Great stuff.
What happened to Vegas Stories part deux?
Thanks.
Vegas Stories is waiting to be renewed by HBO for a 2nd season. Rest assured, it is coming.
agree with lasertrader – chess, I really enjoy reading your posts and appreciate the time, thought and effort you put into creating them
Thanks for reading.
Bought some KNX. Bought some BNVI.
Sold my TWM, but still holding some SKF. Also holding some GNW, ENTR and UWM and > 50% cash.