Wednesday, September 14, 2011

Adam Hewison: Can You Handle The Truth?

Like a lot of folks, I love good movies. One of my favorite movies is, “A Few Good Men” starring Jack Nicholson and Tom Cruise. I was thinking this morning about Jack Nicholson’s famous line from the movie, which goes like this: “You can’t handle the truth!”

Now here is the reality… A politician can spin the truth about his or her record, WHY? To get reelected, of course. A CEO of a company can spin sales projections to pump his stock up, WHY? So he can receive a bigger year end bonus. The pundits who appear on CNBC and Fox business news can spin markets any way they want, WHY? To benefit their own vested interests in a market.


This is what I really like about the marketplace: It tells you the truth! It literally is a no spin zone. When you examine the recent downturn in the equity markets, the market was telling you that it did not believe in the policies of this current administration. Similarly, when Ken Lay and Jeff Schilling at Enron were telling everybody how good business was, the market exposed the truth on that bunch of crooks by sending their stock into bankruptcy.

So can you, as a trader, handle the truth? Does your political bias or a particular view of a market get in the way of your trading?

When you use a non-biased, objective approach like MarketClub’s Trade Triangles as your trading foundation, you will find you can sweep aside all of the spin and BS. All you have to do as a trader is listen to the real truth, and that is which direction is the trend in the market.

Now, let’s take a look at where the SP 500 is headed.....

The battle continues between the Bulls and the Bears as we have entered into a very tight trading range between 1140 on the downside and 1200 on the upside. Our views are based on our Trade Triangle technology and they continue to point to lower levels. The two important lows that were established on August 26th and again on September 6th at the 1140 area are important support for this market. Long term traders should continue to be short or be out of the market completely, and in a cash position. Intermediate term traders should be on the sidelines waiting for either a buy or sell signal based on our Trade Triangle technology.

Monthly Trade Triangles for Long Term Trends = Negative
Weekly Trade Triangles for Intermediate Term Trends = Positive
Daily Trade Triangles for Short Term Trends = Negative
Combined Strength of Trend Score = – 75

The S&P 500 index closed higher on Wednesday as it extends the short covering rally off August's uptrend line crossing near 1148.10. The high range close sets the stage for a steady to higher opening when Thursday's night session begins trading. Stochastics and the RSI are still neutral to bearish signaling that sideways to lower prices are possible near term.

Closes below the aforementioned uptrend line would confirm an end to the corrective rally off August's low while opening the door for a possible test of August's low crossing at 1093.50 later this fall. Closes above last Thursday's high crossing at 1197.70 would temper the near term bearish outlook.

First resistance is last Thursday's high crossing at 1197.70. Second resistance is the late August high crossing at 1223.00. First support is Monday's low crossing at 1123.90. Second support is the reaction low crossing at 1113.20.

No comments: