Best of the Week
Most Popular
1.The Brexit War! EU Fearing Collapse Set to Stoke Scottish Independence Proxy War - Nadeem_Walayat
2.London Terror Attack Red Herring, Real Issue is Age of Reason vs Religion - Nadeem_Walayat
3.The BrExit War, Game Theory Strategy for What UK Should Do to Win - Nadeem_Walayat
4.Goldman Sachs Backing A Copper Boom In 2017 - OilPrice_Com
5.Trump to Fire 50 US Cruise Missiles To Erase Syrian Chemical Attack Air Base, China Next? - Nadeem_Walayat
6.US Stock Market Consolidation Time - Rambus_Chartology
7.Stock Market Investors Stupid is as Stupid Goes - James_Quinn
8.Gold in Fed Interest Rate Hike Cycles- Zeal_LLC
9.The BrExit War - Britain Intelligence Super Power Covert War With the EU - Nadeem_Walayat
10.Marc Faber: Euro to Strengthen, Dollar to Weaken, Gold and Emerging Markets to Outperform - MoneyMetals
Last 7 days
Bifurcated US Stock Market - 29th Apr 17
Damn the Deficits, Huge Trump Tax Cuts Ahead! - 29th Apr 17
Gold Hostage to Stocks - 29th Apr 17
Warren Buffett Hates Gold… But Here’s Five Reasons You Need To Own It - 29th Apr 17
Stock Market Sentiment, Re-Fueled Along the Way - 28th Apr 17
Calling out the Central Bankers - 28th Apr 17
Fed's Third Inetrest Rate Hike and Gold - 28th Apr 17
USD/CAD - Invalidation of Breakout or Further Rally? - 28th Apr 17
What Happened to the Stock Market Crash Experts Were Predicting - 28th Apr 17
Earth Overshoot Day - Human Population Growth - 28th Apr 17
Misunderstanding GDXJ: Why It’s Actually Great News For Junior Miners - 28th Apr 17
What Makes Bitcoin Casinos So Remarkable? - 28th Apr 17
Financial Markets Improvised Explosives - 27th Apr 17
More Stock Market Short-Term Uncertainty As Stocks Get Close To Record High - 27th Apr 17
Elliott Wave Theory: Is Elliott’s Theory Enough? - 27th Apr 17
Billionaire Investor Paul Tudor Jones Says Stock Market Valuation Is “Terrifying” And He Is Right - 26th Apr 17
The Great BrExit Divides - Britain, USA and France - 26th Apr 17
10 Facts That Show Our Taxes Are Worse Than You Thought - 26th Apr 17
What Trump’s Next 100 Days Will Look Like - 26th Apr 17
G20: SURPASSING THE 2nd GLOBAL STEEL CRISIS - 26th Apr 17
What A War With North Korea Would Look Like - 25th Apr 17
Pensions Are On The Way Out But Retirement Funds Are Not Working Either - 25th Apr 17
Frank Holmes : Gold Could Hit $1,500 in 2017 Amid Imbalances & Weak Supply - 25th Apr 17
3 Reasons Why “Spring Forward, Fall Back” Also Applies To Gold - 25th Apr 17
SPX may be Aiming at the Cycle Top Resistance - 25th Apr 17
Walmart Stock Extending Higher - Elliott Wave Trend Forecast - 25th Apr 17
Google Panics and KILLS YouTube to Appease Mainstream Media and Corporate Advertisers - 25th Apr 17
Gold Price Is 1% Shy of Ripping Higher - 25th Apr 17
Exchange-Traded Funds Make Decisions Easy - 25th Apr 17
Trump Is Among The Institutionally Weakest National Leaders In The World - 25th Apr 17
3 Maps That Explain the Geopolitics of Nuclear Weapons - 25th Apr 17
Risk on Stock Market French Election Euphoria - 24th Apr 17
Fear Campaign Against Americans Continues Nuclear Attack Drills in New York City - 24th Apr 17
Is the Stock Market Bounce Over? - 24th Apr 17
This Could Be One Of the Biggest Winners Of The Electric Car Boom - 24th Apr 17
Le Pen Shifts Political Landscape- The Rise of New French Gaullism  - 24th Apr 17
IMF Says Austerity Is Over - Surplus or Stimulus - 24th Apr 17
EURUSD at a Critical Point in Wave Structure - 23rd Apr 17
Stock Market Grand Super Cycle Overview While SPX Correction Continues - 23rd Apr 17
Robert Prechter Talks About Elliott Waves and His New Book - 23rd Apr 17
Le Pen, Melenchon French Election Stock, Bond and Euro Markets Crash - 22nd Apr 17
Why You Are Not An Investor - 22nd Apr 17
Gold Price Upleg Momentum Building - 22nd Apr 17
Why Now Gold and Silver Precious Metals? - 22nd Apr 17
4 Maps That Signal Central Asia Is at Risk of War - 22nd Apr 17
5 Key Steps For A Comfortable Retirement From Former Wall Street Trader - 22nd Apr 17

Market Oracle FREE Newsletter

Why 95% of Traders Fail

Stock Market Swing Baby, Swing!

Stock-Markets / Stock Markets 2016 Jan 22, 2016 - 05:13 PM GMT

By: Gary_Tanashian

Stock-Markets

This article assumes one is trading the up and down swings in the stock market.  Swing traders are just one segment of a market population that includes those sitting in cash (and/or risk ‘off’ vehicles like Treasury Bonds), maintaining longer-term short positions, our always bullish friends, the “stocks for the long-term” contingent and of course, the indomitable Gold Bug “community”, focusing as ever on one asset class while a world full of other assets is in motion.

“Let’s go let’s go, he’s no batter, he’s no batter… (pitch comes to the plate) SWING BATTER!!!”


That was the exact line we were coached to use in little league.  Picture it, eight kids out there on every pitch taunting the kid at bat with with a canned line in high pitched, pre-pubescent voices.  Yeh, that was intimidating.

Here in the all grown up world of the stock market we need the same consistency, although the timing of a “Swing” command is much more exacting.  With market volatility what it has been, you’d have to get lucky to call (to the day, let alone hour or minute) the exact bottom or top to any bear or bull swing in the markets.  Indeed, I have been expecting a short-term bottom for a while now, initiating a long position on SPY last week (and adding to it this week), but only adding more long positions (and covering some shorts) over the last two days.

So what is a market swing?  It is a lurch in the bullish or bearish direction within a trend.  It is important to know that the bull bounce (swing) we have been managing is within a bear trend now, so bull positions, assuming a bounce manifests, should be considered temporary.

Below we review the S&P 500 from the perspective of daily and weekly time frames.

I was not buying (actually, I did) the breakdown below critical support and indeed noted “SPX has dropped below the critical support area that you, I and everyone else now sees.  What a perfect time for a whipsaw and bounce.” in an NFTRH update.  A short-term whipsaw is what it appears to have been.

This quote above was not bravado, it was the weight of the probabilities based on other indexes like the DJINET (unbroken and at support, as noted in public posts at Biiwii) and the SOX (hit 562 with our ‘swing low’ support zone at 540 to 560, which is massive long-term support).

Assuming a bounce is in the works, as the probabilities (and now, today’s pre-market) indicate, the minimum expected bounce area is 1915.  It does not seem like much, but for those who positioned during the downside, it could be a decent little trade.  First, SPX has to break the Wedge.  In that case, the downward spike below support would be a scout for future bear activity.  Meanwhile, much will depend on incoming technical, macro and sentiment data.  A bounce to SPX 2000 would be a gift for would-be bears.

Aside from over sold technicals, there was pervasively over-bearish sentiment, approaching the configuration of last summer’s fright fest.  We projected a bounce back then because the market needed a sentiment reset, and boy did it ever get one.  From Sentimentrader:

Sentiment is not a timer, but it is a probabilities enhancer; a condition that must be in place in making a swing limit point (in this case to the bearishness).

Back on the charts…

The weekly chart shows that SPX plunged down below the summer lows (thus creating whipsaw potential to purge out the remaining bullish holdouts) but has bounced from flimsy looking (but critical) support defined as the October 2014 lows.  Here we note more clearly the potential best bounce (swing) objective of 2000, which includes very well defined resistance and a couple of down-turned moving averages that have supported the bull market in the past.

So ladies and gentlemen, there is our best ‘swing’ objective.  I and I assume those NFTRH subscribers who chose to step up to the plate can consider that a ‘sell’ or re-short level of high confidence.  Meanwhile, with the way this market has been bucking we cannot rule out a weaker bounce or continued volatility in the short-term.

The chart directly above shows an index in an intermediate bearish trend.  The best opportunities are likely to be bearish in the first half of 2016.  Proceed accordingly.

A final note on swing trading; I read an adviser the other day who stated that if you are down less than the market in 2016, you are winning.  A swing trader who stays disciplined would seek to debunk that notion and make gains in both directions, while being cognizant of the probabilities at all times.  I am moderately positive for 2016 but now that the market is in motion (i.e. volatile), hope to increase that performance as the year goes on.

Subscribe to NFTRH Premium for your 25-35 page weekly report, interim updates (including Key ETF charts) and NFTRH+ chart and trade ideas or the free eLetter for an introduction to our work. Or simply keep up to date with plenty of public content at NFTRH.com and Biiwii.com.

By Gary Tanashian

http://biiwii.com

© 2016 Copyright  Gary Tanashian - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Gary Tanashian Archive

© 2005-2016 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Catching a Falling Financial Knife