You Just Got Lit Up

I am in the midst of an epic turn, now up more than 1% for the day, from down 2.9%. Let this be a lesson for your n00bs out there: when the market is deeply oversold, like it was this morning, avoid short sales. Also, you should keep a close eye for reversals, as they will prove to be the very best trades of your life.

EMES is +13 from the lows. You name it, there was a ridiculous amount of money to be had by buying the lows. Like the old saying goes “buy when there is blood flowing in the streets.” If you were already long, more often than not, you’re better off shutting off the screen and eating a sandwich, than panic out of good stocks.

That being said, we’re not out of the woods yet. There has been extensive technical damage afflicted to this market over the past two weeks. We need to see a reflation trade, led by oil, if we are to extend this rally.

I expect to see a lot of volatility going forward, people bailing out of the market now who were down large numbers earlier this morning. But let’s make one thing perfectly clear: the Russell 2000 was and is deeply oversold. The way The PPT algos works is like a rubber band. It uses reference points of oversold and overbought conditions, based off the technical factors of over 4,000 stocks. When the levels reach a critical point, the system screams OVERSOLD or OVERBOUGHT. More often than not, the algorithms that we’ve developed to measure the market, proves to be fruitful. With TNA, The PPT flagged its 2nd lowest score ever, since it was founded in 2008.

84% of the time, the system has been right, for an average return of 11% over 10 trading days.

That’s my edge. That is what kept me confident that we’d turn the corner and melt faces off like wax on a candle.

As all things in life, nothing is guaranteed and history doesn’t repeat, it only rhymes. But it’s an edge; and that’s the difference between a winner and a loser.