Category: Stock market

Update: Partial stops on SPY and QQQ triggered (see Model Portfolio).

Stock market is 35 days into the first daily cycle of the new intermediate cycle. The daily cycles usually last for a couple of months, and the rally can still continue till mid-April, with a correction into the FOMC in early May. Especially into a young intermediate cycle, a rally can go further than expected.

Smart money confidence has declined noticeably, but is still rather high at 0.6. Dumb money confidence has increased noticeably, but is not too high at 0.58. So the rally will likely continue for a couple of weeks before a correction into the daily cycle low. Additionally, the would likely be a new rally into the second daily cycle.

I want to place partial stops, however, just to protect at least part of the profits in case if the daily cycle has topped near the mid-point of its duration. I will place the partial stops just below today’s lows: SPY @ $455; QQQ @ $363.

Coffee has done another hit-and-run on me: as soon as my stop is triggered, coffee runs higher by over 5%. Perhaps placing stops too close is a mistake I sometimes make.

I don’t want to chance coffee for a couple of reasons. First, the cycle is unlikely to have in mid-March, that would make it an unusually short cycle. Hence, a continuation of the cycle into the low is likely. Second, seasonality agrees with the cycles and suggests relatively low prices into May or even June.