The general question had to do with a couple of assets or specific stocks/Industry groups (like biotechs as you'll see by my answer), how the assets look, how they looked today in to the gains that we anticipated last week for this week as a "Week Ahead" forecast and generally where we are in the process more or less. This is really what I would have wanted to write for the "Week Ahead" post had I more time to get it out.
"Hey (Nice married couple),
I just put out the Week Ahead post, it's essentially what I tried to convey in the last email. Is there strong distribution in to Biotechs and NFLX or the market at large? Yes, but I laid out 3 specific sets of conditions that need to be fulfilled. When the market is giving us a strong edge, you don't have to guess at it, whether it is "close" or close enough, it is a clear signal just as last week's Thursday post for a breakout above the trainagle like price patterns or pinched volatility like Bollinger bands, you know what happens with them.
As for EW guys, I really don't know what they expect, I have a member who sends me updates from supposedly one of the best guys out there and they have been all over the place this week, changing almost every day. Our forecast has not changed once since last Thursday when it was issued. The conditions that need to be met have not changed once since they were put out as well.
There are very good signs that are exactly as I expected and I believe I made those clear last week for this week's price and 3C action. I feel, very good and justified in not having wavered, not having changed the forecast mid-way through it, although if the market changed, I would change my forecast to fit it, but it hasn't changed, it has done as expected, although a little weaker and taking a little longer than I first thought, but the process is playing out exactly as expected despite a couple of days of no real price movement this week that stretched out the process by 2-days, otherwise I suspect we'd have wrapped it up this week as it looks like we have about 2 days to go based on where we are, but I'll know more in the Daily Wrap tonight after I look at the data I can only collect after the close.
Generally speaking, I think if you were a trend trader and did not have an expectation to nail the exact top as most people consider that a fool's game, for us the signals are what call the top just like the February 26th short in NFLX at the exact top, considering the trade set-up was made on January 21st as to what I'd be looking for, so it took some patience, but we hit the exact top, not because I believe we can and should always expect to hit the exact top or bottom, but based on what the charts were telling us and they just happened to be exactly right.
In this week's case, if I had called a NFLX short before today, based on anything other than the charts, I would have been wrong which I'm okay with, everyone is going to be wrong, but I would have been wrong for the wrong reason, I would have been wrong because I made a judgement call rather than waited patiently as we did last time with NFLX for the charts to tell us when (to act); that would bother me a great deal, to be wrong because I was impatient or made an arbitrary call without objective evidence.
In conclusion, the charts for NFLX or Biotechs or even VIX-based assets are moving in the right direction, they are moving in the anticipated direction, when I call out trade set ups/ideas for those assets (I suspect within the next couple of days), it will be for the right reason, it will be because the evidence points to that direction overwhelmingly just like last Thursday's bounce call for this week or Feb. 26th's NFLX short call at the exact top after waiting 26 days since I had posted exactly what we'd be looking for in shorting NFLX and good thing too as it gave us an excellent short entry and a low risk entry not to mention a well timed entry and as such, the position is still at a +6% gain despite a +9.82% gain in NFLX since our call for a move up this week in the market (made last Thursday April 2nd)."
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Now as to the triangle-based forecast, as I said the last two night's in the Daily Wrap, "We need to see some more upside". The fact is the market moves on emotion, especially with these kinds of shorter term moves. Without a move that is strong enough to make people act out of emotion, whether fear or greed-based emotion such as being afraid they'll miss the trade so they chase an asset rather than waiting for it to come to them, they react rather than plan pro-actively, then there's not much reason to run the move. Very little that happens in the market happens out of coincidence or just spur of the moment reaction. Most of what happens in the market like a move like this week's was planned days in advance, sometimes weeks or months. As we have seen with Home Builders and their accumulation during the Tech Bubble popping in 2000, they (Home-Builders) were being accumulated for a year and a half at minimum and a good 2-3 years before the bubble in Housing prices began.
AFTER THE TECH REVOLUTION, THE ADVENT OF THE INTERNET IN THE 1990's AND DIGITAL CONVERGENCE IN WHICH EVERYTHING YOU NEED LIKE A WATCH, CAMERA, PHONE, COMPUTER OR INTERNET CONNECTION, DAY-TIMER PLANNER, AND EVERYTHING ELSE ON YOUR CELLPHONE OR TABLET, WHO IN THEIR RIGHT MIND WOULD HAVE EVER GUESSED THAT BORING HOUSING WOULD LEAD THE NEXT BULL MARKET ANDD SUPPORT CONSUMER SPENDING VIA THE NET WORTH OF PEOPLE'S HOMES INCREASING AT AN EXPONENTIAL GROWTH RATE, ALLOWING THEM TO BORROW LARGE SUMS AND SPEND IT IN THE ECONOMY?
I don't know who would have predicted we'd go from a tech revolution to a boring housing based bull market, but the leaders of one bull market are never the leaders of the next. I have showed you what the home builder charts looked like during the year 2000 as the
Tech/Dot.Com Bubble burst. AS MOST OF YOU HAVE SEEN ON THE CHARTS I'VE POSTED OF HOME BUILDERS DURING THE YEAR 2000, SOMEONE KNEW HOUSING AND HOME BUILDERS WOULD BE NEXT AND THEY KNEW THIS YEARS IN ADVANCE.
My point simply being, that almost nothing you see in the market, whether short term over a week or long term over a full bull market cycle of approximately 5 years happens and wasn't already planned in advance. There's VERY little actual real time discounting in the market unless it is based on a surprise event that no one could predict like some of the tragic events of the last 20 years. This is how we can make a "Week ahead" forecast or a "NFLX trade set-up" and enter at the exact high in price.
Currently even with the forecasted bounce higher this week in the market and thus at least 2/3rd of stocks bouncing with it, we are still at a profit in NFLX as we entered at the exact top. Since our initial trade-set-up (what we were looking for in advance before entering NFLX short), 26 days had passed until we entered. What are the probabilities that we entered at the exact high just by chance over that period of more than 5 trading week?
So once again, very little happens in the market that wasn't already planned in advance, we know what we are looking for before we set up the next major wave of trades and so far, everything has progressed as I not only expected, but had to see happen for our forecast and plan to work.
The Daily Wrap is on the way...
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