I’m not an alarmist.
The sky isn’t falling. But the same may not be true for stocks.
See if you see anything in them. See if you can see what I see.
Then I’ll tell you what I see and what I’m afraid of…
Do You See What I See?
They’re all different market indexes. They all look the same. Don’t they?
Not only do they look the same, but they’re all pointing to the same place – a danger zone.
On every graph, on the right-hand side, after the big drop in October, you can draw a pretty straight line under the dips on the right from the middle of December to now.
What is that line? That’s “support.” Every one of those charts and most individual stock charts look like these indexes. They all have the same support line.
What’s the problem?
If they break that support line – if just enough of them break their support lines – they’re all going down.
The correlation is frightening.
That’s what I’m worried about.
A major market sell-off can happen. We’re at that point – we’re hanging on to support.
Then again, support can be support. And we could bounce higher and make new highs.
As I write this, as we head into the close today, after being down triple digits this morning, we’re now up triple digits.
So far, so good. Support levels are holding.
However, I’m more concerned about preserving my capital than risking it at this juncture.
Right about now would be a good time to check your stocks, to put down some stop-loss orders, if you don’t have them down already.
Now is the time where I like to put on trades that will make money if the markets fall.
We’re down with our stops in my trading services – Short-Side Fortunes and Capital Wave Forecast – and we’ve got on some neat positions that will make a ton if the markets do fall out of bed.
And if they bounce off support and head higher, we’ll get out of our downside plays, take off some of our hedges, and let our portfolios bask in the sunshine of a rising market.
But, like I said up top, the truth is that I am concerned.
That’s all. I told you I’d let you know if I became uneasy with how the market is acting.
I’m saying it now.
Editor’s Note: But it’s not all bad news – if you know how to play markets like this. Shah has put together a presentation that shows you how to extract exponential gains – time and time again – from some of the biggest, most secure companies on the planet. Look for it soon.