Perma bears are making hay while the sun shines. They are the one's sitting in cash, waiting and taking pot-shots at bulls who keep buying falling markets.
Whilst the bulls keep trying to call bottoms in the market, and have done so since the first lows in March. Any sign of a bullish candle, oversold oscillators, 3 up days in a row, and they believe the bottom of the market has been confirmed and a new bull trend will begin.
There will always be a bottom in the market each month and each quarter, but it’s how you use those bottoms that matters most, not what you think will happen after a 3-5 day rally.
As I've always said... "those that anticipate best will prosper".... and I'd like to be Buying as close to support as possible, not after a 3-5 day rally.
Simply trade what you see and not what you think will happen. Adjust to market dynamics and be patient, the trades will always appear.
Around these October lows I’ve traded Resource stocks twice, and exited both times with the best gains of 17%:- BUY support.
This support disappears in November. What this means is, my BUY zones in October have shifted lower but doesn’t mean the market will go lower.
I’m in cash positions on both the Financials and Resources stocks. If the market goes down in November I’ll trade accordingly using my model.
If in fact the lows in October have been set and the market continues upward next week, then I’ll adjust to the market.
All I'm concerned is trying to trade and make over 15% per quarter, the more downside, the more frequency of trading each quarter and the more potential return.
15% per quarter can easily end up being 50% per quarter:- 3rd quarter lows on Financials were a perfect example.
At this stage in this down trend I still think it’s way too early to be buying and holding stocks for the long term......
XJO Yearly11th October Weekly Report:- "A Monthly and Quarterly close below the Yearly lows constitutes a breakout, which will lead to further erosion in stocks prices in the 4th Quarter...and a bear market and then another leg down into 2009
October lows resistance (breakout forms resistance), and the trend guide for the 4th Quarter will be defined by the November 50% level.
If that's the case:- then around November lows could provide the ideal 'swing' low for a swing back towards the 2008 lows breakout"
Since that Report the Market has reversed back up into the October low breakout and reversed back down.
This often occurs to verify the breakout, which more often than not leads to further weakness into the extended lows in the following month:- 3580
At this stage:- whilst price is below the November 50% level the expectation is that price is going to continue down into November lows.
SPI Futures:- Monthly and WeeklyIs the Aussie market going to continue up towards 4315 in early November, or reverse down from next week and continue down into November lows?
I can't answer that until things begin to unfold... but a higher Weekly open and trading below the Monthly balance point @ 4155, can easily sell down at the start of next week.
If the Aussie market was going to continue higher in November, it should have already be trading above the Weekly 50% level....In fact it struggled to even get that high last week:- 4140
Financial Index:-And when I analyse resource stocks and the Financial Index the same breakout patterns have occurred even though these stocks look supported in October.
This is the first time since the January breakout that the Financial Index has closed below it's Monthly lows, which more often that not goes lower in the new month.
The Financial Index should have bounced off the 4th Quarter lows in the first 2 weeks of October and should have closed above the October lows, and not below.
Resource stocks have been supported above 4th Quarter lows, which I've bought and sold on 2 occasions in October:- Exit Weekly 50% levels.
But both BHP and RIO have failed to close above their October lows:- Dilernia model.
This favours more downside in November.
Note: there is no guarantee that the market will go down into 3580 in November, but after buying stocks on two occasions in October and selling them, I'm happy to sit in cash positions and wait until things begin to unfold.
Note: As my 11th October report suggested, if price can move down into November lows, this will be the pattern that I think should finally get more Buyers appear pushing the market higher into the close of the 4th Quarter....
But will eventually lead to lower prices in 2009.
