My trading plan for the coming days

October 30, 20231 Comment

When to buy, when to sell. That’s a critical question at this juncture, given the recent crack of technical’s to the downside. Today, I’d like to review the basic rules of engagement as presented in my Online Technical Analysis course. We can review these rules, and apply them to todays markets. Lets get at it.

Here’s the rules, taken from a slide out of the Online Course

Discussed later in the course is the “Rule of 3”, which tells us that we must react to the above sell or buy signals – but only after waiting for a MINIMUM of 3 days, up to a MAXIMUM of 3 weeks of the breakout / breakdown.

OK. So what do we see on the chart below, when referring to the above rules? Note that I’ve added a few of the longer looking indicators such as 40 week (200 day) & 10 week (50 day) SMA’s, moneyflow and the super long termed (60 month/ 240 week) ROC oscillator

 

  • Primary rule – macro trend pattern comes first. We see a break of important support at 4200, but as I write this we are only at day 3 of the break. We must watch for a rebound OR continued breakdown in the coming days.
  • Moving average: We see a break of the 200 day SMA (40 week).
  • Near termed pattern: We see a continuation of neartermed downtrend price channel. Price is below its 50 day/ 10 week SMA.
  • Wait a MINIMUM of 3 days before taking action. Wait up to 3 weeks.
  • Other clues (presented later in the course): Cumulative moneyflow, moneyflow momentum are bearish, need to hook up. Also, ROC long termed (discussed in course) is oversold but also needs to hook up before becoming attractive. Force index (Not covered in course… moneyflow and price momentum with volume combined) is bearish, not hooking up.
  • Seasonal favorable period begins next week. This adds to my convictions to wait a week before spending our cash OR selling more.

Trading plan

  • I plan on waiting until next week to see if there is a rebound over 4200. If not, we then take action (sell more) next week.
  • If  SPX does move back ahead of 4200, we wait at least 3 days then start buying. Ideally, a break above 4350 (high in S/T down channel) will inspire a greater buying conviction, but one could do a small leg in prior if desired.
  • We sell or buy in increments (leg-in principle, discussed in course). No rash moves.
  • We remain just under 30% cash in our Equity Platform at the time of writing. We’ve been like that all summer. So if there is opportunity, we have the cash to take advantage of it. I’ve been suggesting you guys hold cash over this period too. Hope you did.
  • Note that TSX looks very tradable for a rebound, and we may move on that trade next week upon any positive signs.

One Comment

  • TSX struggling..

    Nutrien cracked $77, now at $74, despite a not too shabby dividend yield, and prospects for fertilizer.

    It is what is …

    Reply

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