The "spring" doesn't get much more compressed than this
When I review my daily scoreing system, I think of it as an indicator of how compressed or extended the market is. Green numbers indicate a compressed spring while red numbers indicate an over extended spring. The lower my scores get, the more compressed the market is. Currently the scores are all in the green and the overall score is the lowest I've ever seen it. This is telling me that when the market does go, it is going to rip everyone'e faces off for a short time.
Now the question is, when will the spring be uncaged? That is where the RumWave chart (that I don't post) comes in. It has a particular knack for predicting the change in direction. Currently it is very very close to meeting my criteria to indicate a change in direction is upon us. In fact, it is so close that it could almost be considered within it's notional margin of error. Also, there are a couple things on it that lead me to believe the rally will start Monday. If we get a decline, the criteria for a short term market bottom will, in all likelihood, be met. If we get a pop, then it will likely be the start of the short term rally, and the bottom will have been Friday.
Here's the problem: I think this upcoming rally could be the last "death throw" of this longer term impulse higher. The daily and weekly charts are showing some significant signs of weakness and a "common sense" Elliot wave count looks to be complete. (I know there are lots of complicated EW concepts out there, but I like to keep things simple).
All this said, when I do get long (buy a bullish position) I plan to use a trailing stop. I'm not usually a fan of them but I think it is warranted in this particular case.
Scores and Charts:
The Slow Stochastic on the chart above is at extremely low levels.
Previous bearish divergences (yellow lines) led to very low Bollinger, RSI, and CCI scores.
TSP GAMEPLAN: Stay in the G fund for now, wait until the green light on this blog. Then, for the subsuquent 1-2 weeks a position in the C or S funds should be profitable. Plan will be to move back to the G fund after that.
Questions, comments? Email me: firstname.lastname@example.org
GOOD LUCK NEXT WEEK!