Models call for rally to extend into FOMC meeting, then we improvise

Raul3 Sun Jun 10, 2018 3:08pm EST 1 Comment

Greetings,

It took me many hours to work through the Sunday process of building the Exodus strategy session. Not because there was lots of information to digest but because my ADD is popping off. Like I heard a bird halfway through the last sentence and my brain went to work identifying it as a woodpecker. Then I looked out the window for it. Then I came back to the computer and before you know it I was reading a Wikipedia on the cockatoo.

But the model is the model and it is nearly four years old. Muscle memory carried me through completion and it generated a bullish bias. There are lots of other contextual pieces to support the claim including the NASDAQ transportation index which appears to be in a new discovery phase.

The model cannot predict how investors will react Wednesday afternoon when the Federal Reserve makes their rate decision. The gambling halls in Chicago are giving a 91.3% probability of a 25 basis points lift in the benchmark borrowing rate. This is a live meeting and even though we all pretty much know a 25 basis point hike is to be announced, we have no idea how the markets will react to the fact. So we use third reaction analysis to give us patience and then we go with the third reaction into the end of the week.

It really is that simple.

And most of investing and trading is simple. The problem is, keeping things simple isn’t easy. Our ADD kicks in. Some friend-of-a-friend hears that the tests at some pre-revenue biotech company are going well and we buy a couple 100 shares, despite that never being part of our simple plan. Bad dog. Smack yourself on the nose with a newspaper.

This is my birthing week. Perhaps that is what has me distracted. But before then I am hosting an investor meetup downtown. If you are around Detroit Tuesday afternoon, come hang out. We are going to review what has happened over these last 6 months and formulate a plan for the second half of the year. Here is a link to some more info about the event: https://www.meetup.com/Detroit-Investors-Traders-StockTwits-Meetups/events/251111628/

I am giving another talk at the end of the month during Detroit Startup week. That one is going to be cool. It’s at the YMCA so I may work in some deadlifts while we talk about starting small and building beautiful investments.

But for now our job is to ready ourselves to trade Monday. Then we will prepare to trade Tuesday, and so on. You can start by reading the Exodus Strategy Session. Or you could take the important step of building your own research. Both are good. Or you can just take my word that the model is bullish and if it turns out I’m wrong you can assuage all guilt onto me. That’s classic interneting.

Exodus members, the 186th edition of Strategy Session is live, go check it out!