After a huge move up on very little earnings, Small caps (Risk On) have now formed a
Head and Shoulders Pattern. Coupled with a number of other indexes that have hit
resistance and the fact VALUE has been in vogue of late. The danger light is flashing.
Head and Shoulders are continuation patterns in an uptrend and topping at all-time highs.
Clearly, the H&S here is within the channel for now. Though a break here of H&S
would lead to a channel break and raise the risk of a top.
Markets have to be ready to fall Again one index alone is not enough. But we do have
several of them at various areas of resistance. NDX is a one of those examples
This resulted in a head test (common)
Now the head is acting as resistance at least for now.
Tops are extremely difficult bc they give many false signals and can only be known
after the fact. But! There are signs at key areas where they should be listened to
even if they end up wrong bc managing risk is the key to successful trading.
Give up a little to avoid losing a lot. Unless you are running a mutual fund.
In that case you can't move fast enough without screwing yourself in the processes.
Clearly what happened to Cryptos recently was not a crypto event but rather a risk off
event. The biggest winners get hit the most as managers rush to take profits & raise cash.
For now, a break of this H&S/Channel would warrant a nice risk-reward short.
Head and Shoulders Pattern. Coupled with a number of other indexes that have hit
resistance and the fact VALUE has been in vogue of late. The danger light is flashing.
Head and Shoulders are continuation patterns in an uptrend and topping at all-time highs.
Clearly, the H&S here is within the channel for now. Though a break here of H&S
would lead to a channel break and raise the risk of a top.
Markets have to be ready to fall Again one index alone is not enough. But we do have
several of them at various areas of resistance. NDX is a one of those examples
This resulted in a head test (common)
Now the head is acting as resistance at least for now.
Tops are extremely difficult bc they give many false signals and can only be known
after the fact. But! There are signs at key areas where they should be listened to
even if they end up wrong bc managing risk is the key to successful trading.
Give up a little to avoid losing a lot. Unless you are running a mutual fund.
In that case you can't move fast enough without screwing yourself in the processes.
Clearly what happened to Cryptos recently was not a crypto event but rather a risk off
event. The biggest winners get hit the most as managers rush to take profits & raise cash.
For now, a break of this H&S/Channel would warrant a nice risk-reward short.
Comentário:
Seems Easy now. But no one believed me back then.
Comentário:
Small caps continue to be bearish with 40% of stocks not making any money whatsoever. Higher rates will kill Zombies companies when they have to roll over debt.
Real Macro Economic Investing
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