Goldtent TA Paradise

China & Small Caps Suggesting Reversal Nearby

1. Spock says:

   October 10, 2015 - 1:56 am at 1:56 am

   That was one of the reasons I exited all longs on Friday…the small caps under performance compared to the big caps, and the fact that all the major indexes, including the small cap index, have done this recent rally on declining volume, as per your chart. That points to short covering rather than new buying…a lack of conviction.

   That is one problem with a mechanical extra day trading system, which I use, in that it identifies the trend reasonably early, but one still needs to use some discretion to identify the characteristics of the trend based on other indications, such as volume, and when the trend starts to run out of steam. In those cases it raises a red flag, and therefore time to cash in and watch from the sidelines for a while.

   I really appreciate your work Mark, in identifying the red flags. They must be respected. There was no way I was going to sit on 100% all in long over the weekend, with multiple red flags popping up on Friday. Better to go back to cash, bank the profits, and see what develops early next week.

   • Mark says:

     October 10, 2015 - 8:57 am at 8:57 am

     Yes, I’ve been noticing a rotation out of the RUT and into very safe, stodgy names. That’s not the sort of behavior that leads markets to higher highs….at least not yet. This all smacks of a another wave of decline coming.