Traders Edge Blog

The Traders Edge Insider: June 2013

Hey everybody, here’s the download link for the June edition of the Traders Edge Insider:

Traders Edge Insider: June 2013

Speaking of doing well, despite all kinds of negative vibes, from talk of an overdone rally to the ‘ol “Sell in May” and “June Swoon” maxims, and for good measure a whole slew of additional reasons heaped on that tell us this market should be tanking, the U.S. equity market continues to trade near its highs and the bulls continue to show some real resolve. They certainly appear serious about taking things higher still. We shall see.

No doubt this thing will turn at some point, but from now till then could turn out to be quite painful to those people out there who continue to insist they know what’s gonna happen versus those of us who choose to trade the market as it presents itself. Don’t know about you, but I’m here to make money – not to be right in calling a market top or to make predictions on something I have no control over. To me, that’s pure brain damage and an exercise in futility. Whatever the case, the markets been ranging a good clip most days, so there’s certainly lots of opportunity out there for us to book some sweet profits.

I’ll tell you one thing that’s an absolute relief – the missing sense of doom that prevailed for the better part of the past five years. It was literally one disaster to the next. Now, it’s back to earnings and performance driving the market and dominating the headlines. Stuff that makes sense…that’s fine by me!
Oh yeah, I saved the best for last. My buddy DRJ was kind enough to give up some of his most valuable time to be interviewed for this month’s Traders Talk. When I say valuable, I mean it – big time! Not just on his part because of what his time is worth – that goes without saying. No, what I’m talking about is the value of that time to you! Do yourself a BIG FAVOR and take time to read it – much of what he offers goes to the core of what’s made him the success he is…to ignore it is more folly than predicting markets!

Well, for now I invite you to sit back, read and reflect on the June edition of TEI. It’s packed with good, actionable info and definitely worth a read – sure to serve you well this month and beyond.

-PJ

Perspective…

Low and behold, we talked just the other day about the fact the S&P 500, despite its recent swoon, continues to maintain its near-term trend support back at roughly 1,600…which is just about where we find ourselves now. As I said in the TEI Insight piece, “For many, this is yet another retrenchment move and 1,600 or thereabouts represents a great opportunity to load up more on the long side before the next assault leg to new highs.”

Well, it would appear that in the coming sessions we are going to find out if those that hold that opinion are correct in their assessment…or if in fact that is wishful thinking. With the INDU losing 15K on the close Wednesday (June 5), there are lots of nervous peeps out there wondering if now might not be time to head for the exits…such is the fair-weathered nature of the bandwagon.

Fact remains that 1,600 for the SPX is the near-term level to monitor regarding direction on the market. If that level falls and fails on a retest, then we can get serious about talk of a trend break and start to have some confidence in shorts of a sustainable nature.

How sustainable?

Well, as the daily chart illustrates, there are certainly a fair number of stopping points along the way, but the truth is the downside target is the 1,535-40ish level. From there, well, I stand by what I stated in the Insight piece, “A failure there and we are looking at more than retrenchment…suddenly the reality of correction is at hand – the 1,518 level represents a 10-percent slide from the intraday record high.”

More ominous would be a fall below 1,500, as demonstrated on the monthly chart:

While 1,500 is a key technical/psychological level, the reality is that just below at roughly 1,450ish, there lies the balance of power for control of the longer-term outlook for the market. That spot on the map marks the primary support level of the recovery channel dating to the ’09 breakdown low. There’s no overstating the significance of that level and what a break would represent! To most, such a failure would signal that the BULL IS BROKEN…the recovery channel has imploded.

To be sure, there is a key secondary channel line drawn off the ’09 low and the 2011 low (itself the test of the 2010 flash-crash low) which sits back at roughly 1,350. That level is very significant because it happens to represents exactly a 20-percent correction from the intraday record high of 1,687.

IF….big big big IF… we found ourselves wondering around in that neck of the woods, you can be sure the bandwagon would have long-since jettisoned its load and that the smart money/deep pocketed folks would be in the process of quietly sniffin around lookin for bargains amongst the blood-stained, abandoned rubble.
But that is but a sweet, far-off dream for the bears at this point… Some would label it a dream of another sort…

Let’s bring it back to reality for now. Best way to do so is to provide some perspective, if you will. We talk about the trend being with the bulls, a fact that is indisputable… when considering the 2009 to present period. But when we broaden the picture to a longer horizon, as I am oft to do… Well then…

Hmmmm……. Makes you wonder just who sits at the Throne of Power…and where this thing is headed…..

We shall see!

~LH