http://www.stockrake.com

I think I have seen enough evidence that the market will in fact continue to rally. Not that this chart will be the answer, but demonstrates where I think the potential for this is. This rally, if it continues, and I think it will, can go higher than most people even have targets for right now.

My plan today was to sell some of my index shorts and be in a hedged position going into next week. This would allow me to dump the shorts on a pullback next week and still be in the right place. Instead, I sold my shorts and went long in a light manner.

I plan to add on down days and plan to add some dinky stocks next week that I’ll post after I buy them.

I wrote back in October of 2008 that I was seeing oversold signals NOT seen in many years. The close on 10-10-08 is where the COMPX is heading next. Above that there is a large air pocket up to the gap @ 1947. As you will see in the Carter Worth video below that basically all the bullshit the market has done below the 10-10-08 low is one big bag of noise. We have been basing and this rally right here is just bringing us back to the line in the sand. Why is this a big deal? Because relative strength in sectors, and other indicators have improved in a major way and many have ticked positive. Plus the volatility indexes have a lot of juice in them IF the market is truly going to go higher. That’s right, we are at LOWER prices in the indexes, yet indicators across the board are MORE POSITIVE than that giant spot on the charts called October-November 2008.

Carter Worth from Fast Money backs me up

This rally seems very similar to October 2002 to me if not better. I didn’t think this week would close out as strong as it did. I expected a stealthy pullback this week and then going forward we would move up in a fast way. So now I won’t be surprised if we get that back and fill over the next two weeks. As long as the positive stuff continues to stay positive and/or improve while the market pulls back, it could lead to a bigger up leg than what we’ve seen already. Again, do things like SRS and FAZ need some oversold relief? Yes.

Moreover, if this scenario doesn’t unfold immediately and my stuff turns down, then the next up turn will likely be the above scenario.

Related Posts