The Dow Utilities, against which I have January 2019 puts (by way of XLU), has been tearing higher since June 12th. The moving averages are still intact, and we’re coming up upon a wall of resistance that I believe will cease the public’s newfound adoration of utility companies.
Slope of Hope Blog Posts
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Whenever someone argues against short-selling, they often bring up two very scary words: Infinite Risk. In other words, the most you could lose on a long position is 100%. But there is no mathematical limit to short losses. You could short a stock at $10 and it opens the next day at – – what – – let’s say $500,000. Shriek, right?
Well, yeah, but that doesn’t happen. I think the most horrendous wipeout I ever suffered was a 50% gap up, and since my positions are typically 1% of my portfolio, it wasn’t devastating. If someone is going to argue against short selling, I think a far better and more realistic argument is not that losses are unlimited but that profits are limited.
In other words, the most you can possibly make on a short is 100% and, let’s face it, stocks never go to zero. Hell, I think even Lehman Brothers is still trading in some form to this day. A gain or 20% or 30% – – maybe 50% once in a blue moon – – is a terrific success.
However, the profits on long positions are unlimited. Making more than 100% – – be it 500%, 1000%, 5000%, or even 100,000% – – is absolutely possible, and it’s been done by people all over the world. The main ingredient is timing and patience.
I’ve used SlopeCharts to create some percentage charts below, to illustrate some long-term winners as Intel……
By Avi Gilburt, ElliottWaveTrader.net
As Ecclesiastes notes, “There is nothing new under the sun.” This, too, applies to the stock market.
The average investor trap is the same throughout whatever period you wish to review. Markets become overexuberant, see a correction, sentiment resets, and markets rally on to their next phase of overexuberance. It is really that simple. Yet, we overcomplicate matters by relying on economics and fundamentals, which have proven to be relatively useless at major market turning points.
On this quiet holiday weekend, I thought I’d share a couple of very long-term charts (which PLUS users enjoy via SlopeCharts) Here’s the Dow 30 featuring Fibonacci retracements and a projection. As you can see, the projection has been exceeded (see inset); in the normal world, this is called a “failure”, but in the world of charting, it’s a “throwover.”
As I sit here on Halloween night (yes, this show was pre-recorded), waiting to dole out candy to the kids of the neighborhood, I thought I’d thumb through a few my-God-when-will-they-stop-climbing index charts. So here goes………
In the year since Trump was elected, the Dow has climbed nearly six THOUSAND points. What’s surprising is that not once has Trump ever mentioned the strength of equity markets during his tenure. He’s been too focused on the job at hand, and doing it superbly. And no matter what your political point of view, you’ve got to respect that.
Note from Tim: In case it isn’t screamingly obvious, I did not write this post.
Many will simply read the headline to this article, and use it as support for their belief in the market striking a multi-year top right now. I mean, aren’t headlines like this proof that the market is overheated?
Well, the answer is a definite “sometimes.” You see, back in 2015 and 2016 I was writing articles with headlines saying that we are going to target the 2500SPX region. And, if you thought that those headlines were portending the end of the bull market, then you were clearly wrong. So, consider, maybe this headline is prescient rather than a contrarian signal.
Based on what I saw during my visit last night, Disneyland’s newest ride is the Leap Over an Opioid Addict attraction just outside the park. They were all white males around thirty years old or so, sprawled out on the ground. At least it was more engaging than the boring Monsters Inc. ride inside the park itself.
But that’s not why we’re here. It’s a Sunday morning, and I’m out of posts (except for one waiting in the wings for the appropriate afternoon), so I’ll cobble one together. It isn’t easy, though. See, here’s what a normal market looks like: