There are 3 ways you can look at the stock market. Fundamentally, technically and sentiment. We’ll take a look at one of those to see if the stock market bottomed on Friday.
Fundamentals is the look at financials to numerically evaluate the level of the market. Looking at the stock markets in this way, you can calculate a market wide Price to earnings ratio and compare it to previous points in the past. I’m not a big fan of this, as markets are foreward looking and earnings look back at least 3 months.
Technicals is looking at charts, or previous price action to predict the future. This should be your main way at looking at the markets, because price action doesn’t have any bias. The only issue here is that EVERYONE can see a chart, and while not everyone will read it the same, and while our brains work against us when reading charts (Blame Dopamine) – it can give you some big picture view on the market that other traders may be looking at.
So here’s a chart of the SPY, which is an ETF (Exchance Traded Fund) that mimics the S&P500. You have to click on the thumbnail image to see it better. But it gives our view.
The third component is Sentiment. That’s basically how we feel about the market. And more importantly, how traders feel about the market. My theory is that the market is built from a complex system of feedback loops that reflect what traders are doing with their money and in the process it establishes forces that can influence the market. These forces represent energy. That energy is bound by systems, since 70% of the market is computer traded.
So if you can figure out what the computers are doing? You can trade right along side of them. That’s where most of my work is focused. And I give access to all measures of this energy.
To learn more, click here.
My system remains in Sell Mode. Which you would play by being short the QQQ, or being long QLD or being long SQQQ. We also recommended PUTS on 5/4 that are doing extremely well. Extremely…
I see a potential bottom coming in this week. If you want to play along, sign up and become one of my clients. If you’re interested in having your money managed by us, click here.