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Wile E Coyote….Genius? Or falling off the cliff? – Dr. J's Market Thoughts Press "Enter" to skip to content

Wile E Coyote….Genius? Or falling off the cliff?


There are two charts to share tonight and they highlight everything I have been sharing my THOUGHTS about regarding this market.

The top chart is a WEEKLY chart of the entire 2016-2018 white channel I have been talking about for quite some time.  It has guided price higher for 2.5 years and it had to break at some point.  It broke on a daily close on 10/11/18.  It broke again on Tuesday of this week, and again today.  Last night’s post warned what might happen if the market doesn’t scramble back up to the channel and a 3% losing day was a definite possibility.

On that top chart, once of the places I believe we have support below us will be near the 2018 lows from February.  The green line near SPY $252 is marked to show you visually where things could go.  The yellow circle is a range of potential bottoming prices in the NEAR term to be mindful of.  If you are of the mind to “buy the dip” and put some cash to work, you may want to do some research and decide if that zone works for you.  Talk to your advisor and see if there are any strategies that make sense for your portfolio.

The lower chart is a daily chart of the 2018 action in the market.  On the left side, you see the February correction, the grind higher all year until October, and then the recent crash.  The teal line is the falling 50-day moving average (blue arrow), the red line is the falling 200-day moving average (yellow arrow), and you can see price has broken well below the white channel line holding price for 2.5 years.  The yellow circle on the lower chart is where price ended today.

If you look at the upper chart, note where price started in February 2016 and decide if you are willing to ride price all the way back there as a “buy and hold” investor.  That outcome has potential.

There will be a PROTECTED subscriber post coming out next week with some vital information given the action of the market lately.  Is it time to subscribe so you can read those more detailed posts and get updates e-mailed to you?  If you are 100% invested, I think you’ve already lost more than $199 and I will repeat the thought I shared in early October posted here for you to verify, but I will post it again:

I’ll be watching this week for a daily close above this level to indicate more upside on the way.  If you are looking for a short position, this could be a good place to take a bite at the apple.  Why?  Because if you took a position in the 2930’s, once price closed above 2941, you’d exit the position and chalk it up as a loss.  Nice try.  If it works out, you’re in GREAT position to ride that short for a decent gain if price continues to fall.  Trading 101.  Hope that helps someone out there.  🙂

UPDATE on 10/4/18:  Well, if you took the short position, I hope you have booked some trading profits from the 40 plus point drop over the last few days.  Depending upon the method, that is a nice “short term” profit.  There is no guarantee we stay down near 2900 or below as we can still climb back above 2941 to get another leg higher going.  Leaving a “runner” in place to capture the downside makes some sense, but that is Trading 201, not Trading 101.  Hope some money was made by the subscribers.

Those of us that consider ourselves TRADERS used that information to enjoy a wonderful ride to the downside.  I believe THAT was a thought worth the price of admission.  I’ll be protecting posts more regularly through this correction, so please don’t expect too many more open posts on short term thoughts.