Thursday, 29 December 2011

Russell 2000, Trading The Trend

The Russell 2000 Forecast for December 29th, 2011. Trading The Trend is easy when you know where you are headed and we are heading for a pivot point here shortly. The next pivot point is slated for January 2nd or 3rd, however, nothing is 100%. I think the hardest part of trading is selling. The human reaction to everything is fear of loss, meaning you fall in love with a position, this is very dangerous. Based on the pattern you see in the chart above, there is a very real possibility that we could see the stock markets soar into the start of 2012 and then collapse, that pattern you see in the chart is a bearish pattern. The support line could also be breached in the beginning of 2012 as well. At this point right now I am taking my long position off of the table and waiting to see what happens. Note: Marten Armstrong has 2 good writings in his blog, read them. I also listened to an archived interview of Marten Armstrong at Financial Sense. I listened to the interview when it first aired and I listened to it again last night. One interesting comment Marten mentioned was " We're in a bull market of volatility, particularly over the next 2 years". This comment is very important. I am always thinking about where the market is heading long term (it is exceptionally hard to do of course) and I keep thinking about the way that the chart looked in the High Yield "Junk" Bond Index from the late 80's to the early 2000's. I have a sneaky suspicion that is the same pattern we are going to see for the stock markets heading into the spring of 2016. Flat to 2014 and the very real possibility of strait down from there for 2 years. This is speculation of course but the markets of present day  definitely do rhyme with the past If we play our cards right over the next couple of years, we stand to make way too much money in a flat volatile market. Remember rule #1, conservation of cash

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