Stuck in the Middle With You

Good Morning:

– ☽ – We start with the Monthly Chart for the big picture. On a negative note, the price has traded below last month’s low, a Low of the High Bar Sell Signal – at least if the Candle closed below last month’s low. We don’t trade monthly charts, so the argument is by analogy since the market is fractal (price behaves the same way in every time frame).

– ☽ – Obviously, monthly charts trade too slowly to be useful for buy and sell signals. Still, we note the price action for our narrative. 

– ☽ – But the monthly chart shows us the triangle consolidation where bulls and bears have traded places lately, with neither side scoring a macro trend since August last year. We certainly cannot call the bear market over at this point, though bulls have managed to hold the October and January lows.

– ☽ – The March 13th low should be a 20-week cycle low, and the “M” cycle shape is discernable. But whether the next cycle will be short-lived on the upside, with left translation leading to lower prices, remains an open question.

– ☽ – We have been back to cash for the past few sessions. Taking either the bull or bear side from the middle of a triangle ( approximately 4000 in our case) must be undertaken carefully and preferably by skilled professionals who understand exactly what buying the middle of a range means. Even waiting to buy the first breakout from a triangle can be treacherous. Breakouts fail 80% of the time.

– ☽ – If you want to lose money quickly and consistently, try fishing for the bottom. I could build a very nice home with the money I have lost trying to pick bottoms over the years.

– ☽ – Patience is a virtue. You don’t need to be first. When you look back from the next bull or bear leg, you will realize that you did not need to be in a rush. There is plenty of time for a daily swing trend, not to mention a new bull or bear market.