Trader's Log: Rebound Week? | Investment Moats Skip to Content

Trader’s Log: Rebound Week?

We have been up till now correcting for nearly 1 month. The S&P 500 started off at 873 now its near 683. That is nearly a 21% correction!

For sure at 873 it presents an opportunity to long the market since it looks to break the 50 day moving average. But had you got in then thinking it should be low enough, think again. You are down 21%. In contrast, if you are an investor that is vested when S&P 500 is at 1400, you are only down about 12%. Hardly any consolation.

I feel piss as well although i didn’t lose any during this period. Missing out on getting into SDS for this ride down is bad trading to me. It tells me that my indicators have not correctly tell me enough for me to take a position.

Alot of Elliot Wave Theorist say this is the wave 5 down. Perhaps the right question to pose is whether the fith wave down would be more vicious then the 3rd. Another 1 month of down days and we would have equal the decline we faced in october. However, a short term rebound could happen next week.

Long term wise, you gotta have holding power if you think this is low enough. If you are invested now and it moves to 500 you are still down 25%.Perhaps if you are a long investor, you can either split your monies into 3-4 portions and get invested now. Your target should be the 50 day EMA which sits roughly around 800. A successful breach of that level might give us some hope that we have placed in a long term low.

The story for Gold Stocks ETF is abit scrappy as welI learn that usually in a stock market cycle will see Treasury Yields Bottoming, follow by commodities then stock market and then the economy.

This picture for commodities above seems to tell that Gold stocks are holding up rather well when the general stock market is correcting. I know in this bear market, Gold stocks follow the general stock market mall than Gold prices itself, but if it manage to hold the support that i drew, then we might see a continuation of the trend up.

However, the MACD does show a negative divergence. This may not bode well. On friday i thought that GDX would cut the 50EMA cleanly, but guess i was wrong. I initated a small position on friday to test water, i would rather get a clearer signal at the MACD and when it cuts the 50MA cleanly to lay my full position. At the same time, i need to watch for signs of weakness as well.

Trading Log: S&P 500 down 4.66%
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