The market tippy toed into this selloff, but you shouldn’t be surprised one iota. You knew it was coming, because the pattern told you it would. The pattern almost always validates lower. It was like getting points with the Patriots and somehow you knew that Brady wouldn’t play at game time. Sometimes they’re easy. Hardly ever, but sometimes.
You all watched the chart below, and commented on it ad nauseum these past couple of weeks. It was probably the most popular chart pattern I’ve seen on Stocktwits and Twitter in quite a while. You know, the big bad bear wedge. They are called bear wedges for a reason, and from my lengthy duration trading, almost always resolves to lower prices.
The wedge pattern happened here three times and you could have made gobs of money short every time.
Its so easy to ignore a pattern like this when you are long and maybe want to get longer, but it does save you money if you respect the pattern. This one was so high probability. To see illustrations of these patterns on a daily, real time basis, you can subscribe here.
So where do we go from here? Its not panic time yet, but as I said the other day, it wouldn’t surprise me one bit if they washed this whole thing out into the next fed meeting and started all over again. Not saying it happens, but would it surprise me? Not one bit. We had some great shorts last week and are ready with more if that’s how it decides to play out.
Commodities continue to get beaten like a baby seal with red hair and banks (should be higher with higher rates right?) are doing diddly.
Biotech (I speak of IBB) is interesting because it continues to hang in there, and it bounced nicely after Thursday’s selloff. That’s an interesting dynamic considering this awful tape. The overall technical pattern on IBB is still bearish, but if you pick your spots correctly you can still make nice money.
Winning subscriber trades last week included: BTU +22%, MOS +7.2%, SCO +16%, EDZ +8.7%
This market is never boring, that’s for sure.
Have a great weekend and good trading. Become a Premium Member and get my in depth video analysis of what to expect next week.
Good trading.
