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I had hinted in the past to this new revolutionary form of energy that could change the energy paradigm: LENR (Low Nuclear Energy Reaction).
It came out in these days the news that the inventor of the E-Cat (Energy catalyzer, a reactor that apparently is able to produce large amounts of energy – heat – at nearly zero cost), has sued his US partner/investor company for not paying him 89M USD, after a successful 350-days test with his device.
Today we are going to do something different: often we receive enquiries from prospects that would like to know about the type of returns that can be obtained using the Retracement Levels models. We know from incubator accounts traded with real money and also from backtesting of our models that certain type of results are possible and are certainly above simple BUY & HOLD returns, however for a number of reasons it is not possible to provide this information to our clients because:
a) trading is so personal and each trader inevitably blends his own bias into our systematic strategy/model, so in the end not all traders will follow our system to the letter
b) most traders will fail even if you give them all the tools and support to be successful, because trading is very difficult, it requires capital, stomach, self-control, far-reaching intelligent/strategic thinking and unfortunately it’s hard to find all these qualities in one single individual (that is also why we want to use computers to trade or to support our investment decisions).
The ES market (S&P500 Futures) according to our quantitative models has reached a VERY OVERSOLD price area from where a WEEKLY rebound should happen soon. Lower prices are possible if the bottom falls off and there is a sudden crash, but barring that scenario we should be seeing a WEEKLY bounce this week or the next.
The ES chart below shows the ES market’s current situation:
So, here we go, the year 2016 started with a bang, but a reverse one: the market imploded (actually it started to go down 2 days before the end of the year) and now we may be starting to see what many Slopers have desired for a long time: a BEAR MARKET.
Is it finally going to happen? Probably yes, it’s overdue. We think 2016 has really a high chance to see at least a 20% correction, but you know as it goes with predictions, everyone make one and then in the end they are all very unreliable as it is hard to actually predict anything in the stock market, aside from framing statistical behaviors (e.g. price patterns) that seem to happen repeated times in history and thus are somehow “predictable”. That is what we do at Retracement Levels.
QLD has been down 2 weeks in a row and 2 days in a row. Although not guaranteed, a bounce is probably coming in the next 1-3 trading days. This is the principle of short-term “trend reversal”.
Retracement Levels has developed models to trade several ETFs, Futures and FX markets intraday, DAILY, WEEKLY and MONTHLY. More details on the markets covered are on our website, today we want to show you an example of our DAILY LONG model for QLD: this graph below is part of our model and shows where QLD rebounds more often during retracement patterns that are historically similar to the retracement pattern we are seeing today.
The ESH16 market last week closed down, losing about a 100 points in value from the previous week’s highs. Looking at the ESH16 WEEKLY chart below you can see that the price trend, after recovering, faltered. What have we learned from the last few months? That after a correction there is a mass of buyers ready to step in and push prices back up to the previous top in the ~2100 price area, but as soon as the price reaches that zone the buyers disappear and the market tanks again. Very interesting.
The next valid WEEKLY resistance, according to our quantitative models, is at ~2074, and next valid WEEKLY support is at ~1979 (OVERSOLD).
If there is an attempt to rebound from current levels, the market will encounter WEEKLY/MONTHLY resistance in the ~2074/2166 area, according to our models. There it would be reaching the end of any uptrend, we are not at a major market bottom from where the upside can be considerable.
In short, this means: a rebound is possible soon, but the upside is capped at around ~2100.
First of all, let us say we do not imply that going LONG at this juncture is a good idea: it’s not. (Editor’s Note: I certainly agree with that!)
As soon as the market reaches above ~2100 it will be OVERBOUGHT according to our DAILY, WEEKLY and also MONTHLY SHORT model, so you do not want to be a LONG holder at the top.
However, each time the market goes down (as it did yesterday), an occasion for a DAILY swing trade is created and these occasions sometimes can be VERY profitable. Our ES DAILY LONG model can help with that, providing some information that can take away the noise produced by looking at charts or checking the news (there is no information in there, just noise). For example today we are seeing this, for the current retracement down currently unfolding on the ESZ15 market: