I would rather go ahead and pick stocks that are breaking down now; then to try and catch another few points in a stock that is parabolic. (AAPL)
I have begun trading against the current uptrend. I believe history and the data supports this switch. The market has only moved like this 3xs in history, one of them being 1929. We all know what happen then.
Here is AAPL presented without further comment to illustrate my switch to short side. Notice S&P keeps pace with AAPL.
Next chart is % of stocks above their 200 day average, over layed again with S&P. RSI<10> has proven to be good early warning tool for this indicator. Notice in TOP<A> once RSI 10 rolled over, S&P went up just a little more.
The thing to note here is the S&P index managed to hang around this top for a few months, while the % of stocks in the S&P above 200 day continued to roll over.
This backs my earlier statement, you can take short positions in stocks now that are rolling over. We do not have to wait for the Index to top.
Here is Junk Bonds. True risk on is loaning money to shaky companies. Here we see a divergence of late between S&P and Junk. The junk investors seem to be getting nervous and have started pulling their funds.
Conclusion:
The evidence continues to mount for a reversal, as the Index rubber bands get more and more stretched.
You don't want to be caught over a weekend long a stock like AAPL when a bank fails or something goes wrong. Too much downside risk in ANY PARABOLIC shares, which now include the MAJOR INDEXES.
It is now much safer to go short, companies that have missed on earnings and whose charts are breaking down, verses being long parabolic markets.
Tim Kathlina
No comments:
Post a Comment