The_Unwind

The Stock Market at All Time Historic Highs

TVC:SPX   S&P 500 Index
Follow the arrows on this chart.
Each one shows a new gap up thrust to yet higher prices on the chart
This chart phenomena is called "3 Drives To The Top"

As the market was making historic all time highs this week,
price breakouts in many stocks are supporting the bullish appearance of strong underlying strength.

Human nature being what it is, the pattern of this uptrend is a combination."
of one price drive up, a second building on the first, and a third to solidify the all time price high.
The piling into stocks completes only when the crowd is comfortable that the bullish trend is bedrock, and in place.

However,when you open up the car hood, to find out how the engine is really running,
its peak actual performance is not what you might think
I"ve included the"Know Sure Thing Indicator" simply to show you something called " Bearish Divergence"
that as price has risen to an all time high, it has done so with waning momentum drive and weaker volume confirmation.

This "extension " price rally to new highs shows no sign of abating.
Yet at some point, it will end, and the quality of this breakout rally will be measured,
perhaps like no other rally.

This market wants to go up despite everything else right now.
And it's hard not to think it can't continue into 2020,and beyond
And therein lies the crux of the problem.
That overriding complete belief

THE_UNWIND
11/11/19
NEW YORK





I started using KST in my charts as well and I find it to be pretty good trend indicator. But we've seen short fail over and over again on stock indices so I wouldn't be surprised if it was just a shakeup of weak hands again. I'd much rather wait for the correction to complete and go long with the trend. This setup works more often than the trend reversal and when you manage risk - there's no issue with being wrong. Fundamentals and markets dont agree, but I trade charts not invest on fundamentals.

Thanks for your good work @The_Unwind

Dalio's article is great, I think it's the most read article of last week, everybody is refering to it. there will probably be lots of traders with their stops ready to be collected now...
Reply
@uros,

You are correct.
Waiting for trend change can often capture up to 90 % or more of the move.
Its a much safer bet that way.
However, I have always been fascinated by catching the actual exact trend reversal itself.
I hate to pay more when I could have paid less if I had anticipated the reversal.
Thank you for your continued input and support.
Reply
uros The_Unwind
@The_Unwind, I think we're all fascinated by catching the tops and bottoms. I am as well. But my wallet isnt too fond of it. I think that once the system finally breaks it will be whipsaws for days before we find the direction. The price moves faster when the bus is empty and everybody is chasing. I'm sure you'be riding on he bus when that happens.
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Notice how each brief downtrend just closes the gap up and then pivots higher. Still got gaps all the way back to 2949... IMO we're in a 3rd Intermediate wave targeting 3110 - 3124, a 4th wave will retest the breakout point, triggering dormant buy orders sitting on the books for months and initiate the final fifth wave drive to ultimate ATH in Jan 2020. Ty again for your very thought-provoking posts!
Reply
The_Unwind mansofun
@mansofun,

Dalio's the world has "gone mad" piece is exceptional.
Thank you for bringing it here for discussion...
Reply
The_Unwind mansofun
@mansofun,

Never fight the fed.
+1 Reply
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