RISING MARKETS & FALLING MARKETS

Rising markets include biotech (IBB) which is seen in the chart below. One of the keys to successful trading and investing is knowing which markets are in up trends and which are in down trends. The goal is to be long the rising markets, and on the sidelines for the markets that are declining. The tool to assess whether a marketing is rising or declining is simply an observation of whether price is making higher highs and higher lows (bullish), or not.

rising markets

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Gold, while now making higher highs and higher lows, is in the correction phase of its current intermediate cycle. Price may decline further in the weeks to come, or it may generally trend sideways. An excellent technical tool uses the weekly chart and the Slow STO (14,3) indicator to roughly gauge when the correction phase is likely to conclude. A reading near 20 or below is anticipated before gold resumes its next bullish intermediate cycle.

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53 thoughts on “RISING MARKETS & FALLING MARKETS

  1. MuffinTop

    I did mention that LABU would very likely tag $33 before pulling back and I was right on the money. My hourly charts are looking rather bearish at the moment, meaning we could see a bit more weakness tomorrow and possibly Wednesday — a drop to $29 which would also coincide with the %38 Fib Retracement is very likely but not set in stone.

    After that I expect the rally to continue all the way up to $36/$38 🙂

    1. JJ

      Appreciate your thoughts MuffinTop. Definitely was a bit concerned with the exhaustion candle today in LABU.

    2. j

      Just curious then. Where would you recommend someone entering this position at? What price would be ideal for a entry in the 3x fund? and where would you see a sell point or profit taking price? Sell it all at $37 ? or a stop below if it moved against you , if you use them?

  2. Homer

    Yesterday I mentioned that US politicians are trying to break Biotechs, today after the close U.S. Treasury unveiled plans to limit Tax Inversions. Allergan down 19% ($53) on that.
    This may curtail (or eliminate) a lot of M&A and reverse recent gains.

    1. Ralph Wiederzane

      Interesting, thanks for the input. I’ll also note that Allergan is blowing through new 52 week lows on the news.

      1. Stevie

        Earnings?
        You can’t be serious, anyone that invest in biotech thinking of earnings need to get their heads check.
        Biotech is nothing but a basket of high risk speculative stocks.

  3. Gary Post author

    Sentiment on IBB has reached 85% bulls. If price can continue to hold up despite extreme bullish sentiment that would be an excellent sign that the consolidation phase is over.

    1. Stevie

      Gary,
      When sentiments are at this extreme (85%), shouldn’t one be selling instead of buying?

      1. Gary Post author

        No no no. Sentiment got extreme very quickly in miners as well. This is just a very short term indicator. All it would take to cool it off is one or two down days and sentiment could be right back at bearish extremes.

        The sign of a strongly trending market is that sentiment tends to stay above 40% and makes multiple forays into bullish territory over and over. It’s a sign of strong buying pressure.

  4. Gary Post author

    I’m going to make a prediction that even when the S&P is over 2200 the perma bears at Kereport will still be trying to call a top every day. They’ve been at it ever since the bottom two months ago. For heavens sake how strong does a rally have to be before it looks good to these guys? Every higher high seems to be just another excuse to call a top. Talk about a broken clock.

    Now they are on the band wagon for oil to go to new lows. They are about to get their head handed to them again once oil completes it’s DCL. It will be making higher highs soon.

    Can’t they see that the energy stocks are not confirming the correction in oil? Energy stocks are going sideways as oil corrects.

    1. tulip

      I don’t listen anymore except to a couple of commentors and the fellow from Marseilles FRANCE……
      plus Im tired of “quite frankly”

  5. Pk

    I have a chart of the biotech index showing it hit perfectly the upper line of a bear flag when it reversed. It still looks like a flag to me unless it can break through today’s highs. The candle looks bad right after nailing resistance I believe the next move is down as well as the rest of the market. Need to consolidate or retrace before the next move up. Would be shocked to see spx go straight to new highs without at least consolidation… more likely an 100 pt pullback.

  6. Rm

    These 3x etfs are very dangerous as u better be right on timing.. Your energy trade is deep in the red and will be hard to dig out of with the decay. These etfs have decimated more accounts than any other product by far. I hope everyone is careful with them.

    1. Gary Post author

      Cycles tell you when to expect a turn. Turns always occur on the worst news. Not after it’s already become obvious. This is why I don’t understand these analysts that keep going back to the European economy. It’s already starting to turn back up.

      These nitwits don’t seem to understand the concept that conditions change. They assume that since the economy has been slow it will just continue that way indefinitely. Folks recessions end. They always have for as long as the world has been turning.

  7. Daryl

    Gary,

    Wondering what your timeframe might be for the miners and metals to get back up to the 2011 highs..?? I’ve seen some projections it may take to year 2020 or so……Any wild guess as to where they might be around 2020 ???

    Many thanks, Daryl

  8. Bill

    Lets also take into consideration we have FOMC in Wednesday so some consolidation here would seem logical.

    1. Gary Post author

      It’s at the end of the month. I’m guessing they will want the market testing the all-time highs by then so they can raise again.

  9. Stevie

    Futures giving back all of the employment jam.
    Looks like those SSO shorts are looking better by the minute.

    1. Gary Post author

      At some point we have to have a dip down into a DCL, but I’ve given up hope of it happening in the normal timing band. Whenever we do get it, it will be a buying opportunity and should setup the test of the all-time highs.

  10. Gary Post author

    Intermediate tops almost always occur on a divergence in money flows on the weekly charts. You can see money flows are strong. We aren’t nearing an intermediate top yet.

    1. Bill

      Agreed Gary look at the gaps that need to be filled @60 and 70 LABU, it may seem exhausting to some of us who have been riding this early wave up since is started a week or so ago , but the reality is we are still in the beginning phase.

        1. MuffinTop

          He’s right.. Couple of gaps showing in early 2016 when LABU was falling on its Ass!

  11. j

    I cant see the first chart you posted for some reason but this is not a stock making higher highs and higher lows.

  12. j

    Sorry, linked to wrong chart,, it was supposed to be linked to IBB long term not the DOW, Not very HTML savvy apparently, ,hahaha. I don’t see how you can call IBB in an uptrend other than very short term

    1. Gary Post author

      I don’t wait for confirmations. By the time stocks or biotech complete big turns the move is already over. Look at everyone that missed the move in miners because they were waiting for confirmation.

      The Dow, midcaps and transports have all broken their 7 year cycle down trend line. That’s all the confirmation I need at this point to tell me the odds are high that the 7 YCL is over.

      1. Alexandru Popovici

        Gary, the trendline you are speaking about is the YC trendline and its breakout confirms we are truly in a new YC of stocks.
        But a new YC DOES NOT necessarily mean also a new multi-YC.

      2. j

        So even though youre calling for a ” massive bubble phase last leg rally to ne astronomical highs” BUT if one misses the “turn” as you say, they might as well forget it?? That’s chicken little crap Gary. Just complete nonsense.
        Not everyone other than you missed the move in miners, plenty of us made money in that trade and the oil squeeze.

  13. Ralph Malph

    “It’s” – with an apostrophe ALWAYS is a contraction of the two words “IT IS”. An apostrophe DOES NOT / NEVER DOES show possession with the contraction “it’s”. “ITS” without the apostrophe ALWAYS indicates possession. Just a note to all the writer out there. 🙂

    1. MuffinTop

      Seriously buddy?! You’re looking at a Monthly chart, haha..! And if you wait for it to give you a ‘buy’ signal, it’ll be time to ‘Sell’ and you will have missed the biggest move out of the gate. Same with the Miners.. everyone kept arguing, except that some of us actually made a boat load of money — myself included 🙂

      That’s why Cycle Analysis and Sentiment should be a part of everyone’s trading arsenal. Looking at Charts isn’t enough and will not give you ‘Tops and Bottoms’.

      1. j

        It was in response to the comment that its in an uptrend. It most certainly not. It is blatantly obvious by the chart, but I never said I used monthly charting for buying or selling anything. (Although nothing would be wrong with it.) You just assumed it and then began to repeat all the biased info you get from Gary. I would be willing to bet you personally couldnt show me a cycle on a long term chart or even a cycle count for the last decade, 5 yrs, one year? Or tell me how sentiment trading even applies? But youre gonna rah rah rah on it cause someone else told you so. But if your buying long term, then long term should be what you use whether its cycles or charts.

  14. ChrisG

    You can either view the rest of the world weakness week drag US market, or could think US stock market could drag the world up. I happen to vote the latter. US indices closes above all MAs on a monthly basis.

    1. Jacob 2

      Yep, looks like a BIG baby bull. So much for cylcles and weak seasonals. This keeps up everybody will be chasing rhe strongest sector out there. Just when you figure youve got it all figured out …you don’t.

    2. Gary Post author

      I would still be patient with gold. I said the move down into the ICL would be erratic with lots of counter trend rallies to draw traders in too early.

      Remember the basic rule to know when an ICL is complete is that you are too scared to pull the trigger. If you are worried about missing the move and not about further downside then it’s almost always too early still.

      1. Jacob 2

        Own quite a few miners but not as many as i did a while back. Sold some and bought the bios. No regrets but perhaps it comes under the catagory of trying to be to tricky.

  15. Alexandru Popovici

    the Japanese stock market is continuing its anti-bonazza, now dragging EU stocks down big.
    Just another -5% down and Japan’s indexes produce NEW LOWS 😉

    on the other hand, as I said yesterday:
    – I do not expect the current fall of NIKKEI to last too long –> it should reach a DCL soon, as early as this week,
    – all stocks markets to rise together (SPX, NIKK, DAX) into a new daily cycle by the end of this week into the next 2 weeks,
    – SPX and NYSE to produce a higher DCH which will also be ICH and YCH –> a double-top lower than the prior YCH in May2015 –> the end of the BIG DEAD-CAT BOUNCE
    – new lows in US stocks market into the end of summer as the market will discount the fundamental woos in the Far East.

  16. Alexandru Popovici

    as to USX, I expect another DC in the current IC:
    – USX up into the current DC which will fail and prove left-translated; it will go up this week as stocks correct into DCL;
    – USX to initiate its DC decline as stocks move up into their new DC to come;
    – the DCL to come in about 2 weeks time (i expect a shortened DC of the dollar) will also be ICL and YCL !
    – the BIG RISE of USX into its new YC advance will emerge at the end spring and early summer while stocks will correct.

  17. Alexandru Popovici

    It is clear that now that the Eye of Lady Market has fallen over Japan and ITS IMPENDING PUBLIC DEBT RESTRUCTURING!
    Any analysis omitting this new obsession of Lady Market will be pulverized as dust in the wind.

    1. Alexandru Popovici

      summer usually makes a drag on stock markets.
      The legislative elections in Japan due in June will corroborate this seasonality to bring forth to the selling spree and bloodshed on world’s stock markets.

      By the end of the summer, WHEN FEAR WILL REACH ITS PEAK, THE JAPANESE FUNDAMENTAL PROBLEMS WILL HAVE BEEN FULLY DISCOUNTED AND IT WILL BE THERE THAT YELLEN&FED WILL INITIATE ITS NEW Q.E., THE DOLLAR WILL FALL BIG INTO ITS 3-YC DECLINE WILE STOCKS WILL JUMP INTO THEIR NEW MULTI-YEAR-CYCLE!

  18. Wotan

    Thanks Ralph Malph. I’ve made this point all over the place but we’re not having much luck.

    1. Ralph Wiederzane

      Now it’s 300% again, after the fact you said 200%? And just think, if you had only been in GDX today you’d be up double the SSO and also keep all the money you keep handing your broker. Nice shootin’, maybe you can tell us about it 30 or 40 more times today?

  19. Ralph Wiederzane

    I hear Gary’s advice on waiting awhile longer before buying or adding to miners, but must say there are lots of beautiful bull flags forming in the group. I still have around 25% of capital to put to work. 🙂

  20. Joseph

    Low of day around now till 10am, then high at noon, then back down to end if day into WED, Low of week is April 7…… That’s how I am acting
    Will see

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