We’re up 300 more points!
That would be exciting but it’s only 1.25%, which is exactly what our 5% Rule™ predicted and, at this stage, is certainly no sign of market strength yet. While we flipped bullish in Friday Morning’s PSW Report, with a long at Dow (/YM) 24,000 that is now up $2,500 per contract (you’re welcome). Of course, first it was down $2,500 per contract (cue screams) but not if you followed our instructions, which were:
Well here’s the test of 24,000 and we’re failing that and 2,600 and 6,350 and 1,470 but those are now the lines we want to play long if we move back up but very ugly if we’re failing that.
Just before the market opened (9:17), in our Live Member Chat Room, I updated my prediction for our Members:
For now, we’ll worry about the S&P lines – same as yesterday because, if we have to redraw them, then the Index is already failing (and forcing us to use lower levels).
And, of course, the lines don’t change but the line we key off does. Right now, we are looking at the 20% line on /ES and premising we consolidate there but, as I said yesterday, I think it’s more likely we drift down to the 10% line (2,420) and that’s where we should consolidate into Q2. So, on the whole, I’m thinking 2,684 is going to fail today and we’ll retest 2,640 next week and possibly blow it – hence the desire for more hedges!
Meanwhile, our index longs are doing great – don’t be greedy. Should hit resistance at 1,480 on /TF, 24,100 on /YM, 6,400 on /NQ (big time) and 2,615 on /ES.
That was a chart we drew for Thursday Morning’s PSW Report and now we can update is so you can see how good the 5% Rule is at predicting these moves:
Since we can exactly predict the moves of the S&P 500 2 days in advance (and actually we’re using numbers we based out 4 months ago!), it should come as no surpise that, at 1:17pm on Friday, in our Live Member Chat Room, I was able to make the following call:
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