Jim’s Beliefs About the Markets

Technically Speaking – Charts Don’t Lie

Friday 2/29 – Looking forward. 1) The markets are consolidating. 2) Economic data of interest near term. 3) Crude trying to move higher with other commodities. 4) Interest rates higher 4.25%… 5) SOXX of interest… they are a directional indicator for markets. New high on Thursday. 6) The hunt for the next catalyst is on. 7) PCE (personal consumption expenditures index) data helped, but plenty of data to come from February.

Trends to watch… 1) IWM higher high – higher low… Needs to clear the December highs. 2) XLY moved into a consolidation pattern… broke higher. 3) QQQ broke higher… 4) MDY, RSP, EFA, and EEM are all attempting to move higher. 5) GBTC moving higher again. 6) AAPL trending lower… Moved back to support again. 7) GBTC gone verticle. Small test Thursday. 8) GOOG breaks support triggers a short signal.

My Belief: Know where you are now, know what is happening now, and know what is on the horizon… act accordingly. The goal is to manage the risk of positions, take what the market offers… short or long, and then manage your money according to your discipline (entry, exit, target). Listen to the market not the talking heads.

Charts of Interest – Short Term

Google (GOOG) short-side setup in play. Offered entry point $140 level. May $135 puts @ $5.40.

Telecom (IYZ) Trend Reversal? Yes, short opportunity. Entry $22.75. Stop $22.10 (Mar 23 Puts). Watching the 200-day MA. Adjusted stop on puts. Taking profit if holds support.

IHE – Pharma stocks heading higher (entry $193.50)… defensive sector. Stop $202. Testing again.

XBI – Biotech large-caps stocks are trying to break higher. Entry $91.75. Stop $98. Tested and bounced. Solid upside move… adjusted stop.

Charts to Watch

Not improving following the downside move on asset drawdown.

Agriculture (DBA) As seen on the chart the bottoming pattern is in position to reverse the downtrend. We cleared $21.08 Monday. Entry $21.30. Stop $21.30. Broke higher and has shown solid gains since… Raise your stops. Breaking above resistance and tested lower.

Summary

We are focused on the micro trends currently and the opportunities we see. As shown above there are always opportunities we just have to measure the risk, take what fits our objectives and risk tolerance, and manage the risk moving forward as reality unfolds. The simple format of writing down what we believe to be true and tracking it moving forward is the basis of our investment strategy. If our belief is validated by the markets we invest, if they are not we pass. Most importantly we set stops to protect against the downside risk that exists in the markets every day.

* All charts are courtesy of TC2000

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