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Falling Through the Ice June 1, 2019

Posted by Tom in Thoughts.
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May 31, 2019 – Richard Wyckoff had a saying the when a definite change of character happens it was like “Falling Through the Ice” (a frozen winter time analogy).  Wyckoff never gave a strict definition of the price level of the Ice, and one can argue that it actually happened at the 7965 level way above the current price.  That’s really more my preference.  But retrospect is clearly a more accurate analysis.  🙂

In any case the price weakness continued this week.  Again, driven by news, high stock evaluations and (of course) fear of even lower prices.  Will the FED lower rates because the economy is really not that strong?  Will the trade war with China last for many months?  Will the trade war expand?  The bottom-line is maybe and really . . . no one knows.  Will prices bounce around near this level over the summer, building a base for another run higher?  or  Will prices continue to fall?  Since we have an overall fairly valued market, the likelihood is that the biggest influence will be the news.  And who can predict that?

The NASDQ Composite Index end Friday right near the last “significant bar” low of 7447.  That’s a logical place to move higher after finding support there.  But this market is getting more emotional, so I’m not anticipating anything but going with the flow.  I’ve trimmed back stocks that are behaving weaker than the market, adding to cash.  I’ve also added to my “hedge” by purchasing “bear funds / ETF’s” to lessen the impact of failing prices on what is left.  I don’t mind having cash right now . . . .  keeping your powder dry so to speak.

The table below shows current short term sector strength.  Not much looks good as Treasury Bonds are likely over bought and don’t have much more room upward (IMHO).

Have a good week.          …………….  Tom  ……………….

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