September 23rd 2013: Ignoring the noise works again!

OK - last post on this topic for a while....

But I'd like to point out that ignoring the news (noise) worked again.  Wherever you turned last week, there were smart, highly- (over?) paid economists and analysts calling for $5B-$15B of tapering.  I think they all went to the same school because the numbers were all very close - at least the ones that I heard by accident.

How did that work out for them?  Did they save their clients money by advising them to be "careful" or "cautious"?  Did they get a bigger bonus?  Did they still collect $250K+ for touting their [very wrong] opinions?  Were they at all remotely helpful in making an investment thesis and executing a plan?  How about those kind fellows that said to buy gold and emerging markets at the top based on continued Fed injections?  Was that helpful?

No, no, no.

If one looked at the $SPX chart, put some ear plugs in, went long on a daily close above 1690 (as I suggested in the last blog post), took profits when available, raised stops to the lows of the previous day, exited remaining shares on stop out, etc. - you would have had a great week.

So what's in store for this week?  As usual, it's helpful to look at the charts.

Last week, we had a long-wicked bearish candle that stuck it's head [briefly] above the box and then retreated to close just above the box (by a few pennies).  Most other indicators are still bullish.

There's 3 scenarios to keep in mind here:

1) We rip higher and close above the box with a strong green bar which would suggest a further box-length move in the direction of the break (up).

2) We rip lower and close below last weeks bearish candle which would suggest we attack the lower edge of the box (August lows).

3) We drift sideways and frustrate both bulls and bears.

My 2 cents is that we drift sideways (#3).  After a strong push with FORCE last Wed, it would be unusual to see us just give up and tank.  More often, we see a pause, retest that bar, and then roll if that's the direction the market ultimately takes.  Additionally, most weekly indicators are still bullish and we usually take a couple weeks of neutral bars before we start to roll (see May and June peaks).

Here's the chart:

For more charts and to read a disclaimer, please visit my public chart list on stockcharts.com...

http://stockcharts.com/public/1109955

September 14th 2013: Ignoring the news (noise)!

From the sounds of the financial media, we're heading for global disaster next week.  We've got lots of things to worry about:  Syria, Debt, Larry Summers, the FED meeting, quadruple witching, etc., etc., etc.  You'd think we'd be down 30 handles on the $SPX in anticipation of such gloom and doom...but that's obviously not what happened last week.

When I look at the chart of the $SPX, I see a market that's in an uptrend making higher highs and higher lows.  Has the market sufficiently discounted all of the bad news in August and now we're bouncing in relief?  Or perhaps some very smart (or more accurately, very well connected individuals) have a better handle on next week and are betting accordingly?  For whatever reason, the market looks like it wants higher prices.  Other than being overbought and the volume being light (typical), the technicals look solid.

Here's a thought exercise: pick a time period in the past when we ripped higher for a few weeks.  Do you remember the news that fed that rally?  Do you remember what fears were overcome to squeeze the bears and prod under-invested bulls to commit more capital?  Most people can't remember.  I sure as heck can't remember and it doesn't really matter either because the charts tell the story.

To sum up:  the market discounts readily available public news, some nefarious people know the outcome before the news is released, and the charts will conveniently consolidate all of this and more into price patterns for us to trade.

Here's my trade:  long on a close above 1690 with a stop below.

Here's the chart...

For more charts and to read a disclaimer, please visit my public chart list on stockcharts.com....

http://stockcharts.com/public/1109955