Where The Stock Market is Today, issued May 22, 2008
Fig. 1 above: the market changed from uptrend to downtrend on November 09, 2007 and continued in a downtrend until April 02, 2008. The price has risen past 2363.52, which was a breakout to the upside and trend changed to the upside. The stop loss has steadily gone up to to 2266.29 less 0.1% equals 2264.02. Until this price is broken to the downside, this market will remain uptrend.
Fig. 2. above: from April 02, 2008, this is the chart to be used because fig 1 above shows the trend has changed to uptrend. From April 02, 2008, we remain bullish until the charts show otherwise. Six days later, this chart showed the uptrend to have ended but this was invalid because chart 1 intermediate uptrend (below) failed to confirm it: - the trend remains uptrend. As you can see from this chart, the price line remains above the equilibrium line confirming the market is in uptrend.
Fig. 3 above: April 02, 2008: All downside trades closed. New Neutral positions/Calendar Spreads to the upside established. .Neutral positions/Calendar Spreads to the upside have continued to do well and should be retained to benefit from time decay, otherwise watch the current stop loss/downside breakout of 2266.29 less 0.1% equals 2264.02. Remember that with Neutral Positions/Calendar Spreads, you make money regardless of price direction. The only way to lose, is if the price of the underlying moves too far in either direction in which case the stop loss will have stopped you before it happen. You can also structure these trades so you have a very wide profit zone, with a high probability the price will stay in the profit zone. Up to today, May 21, 2008 these Neutral positions/Calendar Spreads to the upside have been rolled over to the upside three times in an effort to remain in the profitable zone..
Fig. 4 above troughs confirm fig.3 above. May 21, 2008: Wednesday, the entry point to the upside has been confirmed by the chart 3 trough above. - May 22, 2008, open long positions, at any price below 24.4499 .Neutral positions/Calendar Spreads to the upside should be retained. By long positions we mean long stocks, long calls, short puts, etc., etc. The stop loss should be retained at 2266.29 less 0.1% equals 2264.02.
Fig. 5 - This chart, intermediate downtrend, is not in use at the current market situation.
Actions to take today, May 21, 2008 - NASDAQ Composite
Action: May 22 18, 2008: The entry point to the upside has been confirmed - open long positions, at any price below 24.4499 on Thursday April 22, 2008 or thereafter. Neutral positions/Calendar Spreads to the upside should be retained.
Stop Loss/Breakout to the downside: 2266.29 less 0.1% equals 2264.02
Stocks and options trading involve substantial risk of loss. Only use investment capital. Hypothetical performance results have many inherent limitations.