Thursday, February 2nd, 2017

Market in confirmed rally mode

So far so good. Stock market is in a confirmed rally mode since the Follow through day on March 11, 2009, according to Investors business Daily  and William O Neil school of thought. Every bull market starts off with a rally attempt, from the very lows, and has a follow through day subsequently after 4 days or more. At least that has been recorded for bull markets for the last 75 years or so, as per William O Neils books and theory. William O Neil is a momentum player and pattern recognition trader, famous for his cup and handle pattern recognition and breakouts. Its an art not science. All follow through days donot lead to bull markets and 20% of these follow through days fail as we saw last year in the stock market crash 2008. There were few follow through days, but the markets went nowhere, as waves of selling created distribution days.

But as we have seen , cracks have started showing up in this 15 month long recession. New homes construction and start ups have jumped in March and so did new existing home sales. The data came in favorably this week. These are very encouraging signs.

On the hand stock market rally inspired by the Feds has been in a solid uptrend all this month, and I donot know how long this will continue. As a result all major indexes SPX, RUT, NDX are trading above their 50 day moving averages. Well if this convinces you that we are in a rally mode or not is a question of personal judgement. For me its the charts and what they offer me to trade and I go with them. The market has rallied 500 points this week alone on the news that Tim Geithner our Treasury Secretary has put up a plan that will buy $1 trillion dollar toxic assets from banks and clean up banks books with the help of private investors. Remember these are mortgages that have dropped in value and if they are held for some time they can be quite lucrative for an investor and real money makers. But the banks can’t hold them too long.

As the market changes so do we. We have stopped using our at the money straddles that we  successfully traded for the last few months and have evolved to different strategies. Its too early to tell what will work and what will not. We have consistently made profits in the past few months when others were sitting it out.

As a results there are 3 new trades posted in the members area  for April expiration.

1. AAPL  Income trades

2. BIDU Out of the money income trade

3. GS    Goldman Sachs income trade.

The stock market is getting better. We are seeing an influx of new subscribers, there are only limited numbers that we can hold at a given time, after that you will be on the wait list.
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4 Responses to “Market in confirmed rally mode”
  1. Marie says:

    The builder has just destroyed the project with poor workmanship and materials . What can I do now ?


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