While no technical tools are infallible (if they were we’d all be billionaires) there are some good levels below current levels in June Dow and June S&P. First start with the Dow.
Everyone for the past 6 months have been barfing all over their shoes trying to sell this market. For all the noise, we’ve really been in a trading range, albeit a wide one, for a while now. Since February, the 15,800 to 16,600 has given us an 800 pt trading range. Considering that at 16000, 100 pts is slightly more that 1/2 of a percent, we’ve had a lot of 1/2 % and 1% moves. These moves have set tongues wagging every time we’ve had a shudder, and like the boy who cried wolf, there is only so many times you can see the anchor on CNN, CNBC, MSNBC, FBN, or any anchor choking back the fear in their voice, as they trot out another economist who’s bearish, or another “well-known chartist or technical analyst who’s warning of the 10% correction.
In 2013 we were up 30 %. No kidding we are due for a 10% correction or maybe even more. The funny thing is, every time some one’s on the TV calling for a correction, that is actually , IN MY OPINION, a reverse indicator.
We need these people to throw in the bearish towel, embrace the bulls and start talking Dow 30,000 again. THAT will be the signal we’re over due for a culling of the herd.
What I’d really love to see is someone in Washington float giving people the right to invest Social Security into the market. That will be the top. For now, I think we grind sideways to higher.
Because of that , I think its an environment to buy dips.
Not stupidly buy dips. I’m not talking about buying and not putting sell stops below. That would be stupid because failing to use stops is the sure-fire way to have your opinion cost you your trading stake.
So, below current levels in the June Dow futures, I like 16,300 and then 16,200 as a range to buy . your risk should be no more than 100 to 175 points.
For June S&P futures. there is good support at 1863, 1852 and then 1840. These are areas which, if history is a teacher, should give support.
As long as the prevailing psychology continues to be ” Don’t people know how bad things are, Why is the Dow near record highs?” then I think you fade that fear and buy dips.
Of course, at any time we COULD get a head of steam and fear and give the bears their beloved correction.
10% takes us to 15,000 in the Dow and 1710 in the June S&P.
Plan according to your opinion. Don’t take my word for it. Just make sure no matter what bet you make, bullish or bearish, you have an exit plan prior to stepping into the fray.
CER