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What If?

The bears took control last week, crushing all the uptrend lines I had drawn on this chart. Now we have a well-defined downtrend. The market has also edged below several old long term and intermediate trendline extensions. If these aren’t immediately recrossed, the downside becomes wide open.

Chart pick performance slipped last week, with the average gain falling from +3.8% to +2.5%.  The average holding period rose from 13 calendar days to 14, just two weeks as recent longs got whipsawed.

12 longs were stopped out last week. That was, in fact, all of them. I am adding 5 picks to the list as of Monday, including 4 longs and 1 short. That will leave 8 open picks – 4 longs and 4 shorts.

I read somewhere that past performance doesn’t suggest future results. I’ll say! Of course, considering how the market got clobbered last week, I don’t think that a long-only, buy and hold strategy did too well.

Now I want to do a little “what-if” exercise. Sometimes I’m a little slow on the uptake and there’s something that I’ve been noticing for… oh… the past 25 years or so. That something is the evidence that the traditional 4 year cycle died decades ago.

By simply tweaking indicators around that traditional time frame, I have been trying to make a square peg fit a round hole. But they never seem to fit the action. Something has not been right. It has been staring us in the face the whole time.

What if… what if…, skewed by aggressive monetary policy, the dominant cycle since 1994 has been 7-8 years, as it appears to be. And what if that’s still the case? I have superimposed 7-8 year cycle indicators on the monthly chart. And wow! Is that revealing! It’s a completely different message than the one we’ve been trying to make sense of.

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Past performance doesn’t indicate future results. There’s always risk of loss. Chart picks are theoretical for informational purposes only. These reports are intended for professional investors and experienced individual traders. Do your own due diligence before trading.

Posted in 2 - Technical Trader
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