When you take one-part Infinite QE, one-part Good News at the Margin, mix them up in the market and set the algo switch to “BUY,” it’s not difficult for the market to rip a big rally right in everyone’s faces. And that’s why I keep long ideas in my back pocket at all times, right there with my short ideas, and then let the set-ups materialize as they will. This is the essence of the 360-degree approach.
Based on this idea, then, we should not be surprised when bad news at the margin sends the market the other way, as it did last Friday. Yesterday, news was at play again when investors were treated to the by-now classic rug-pull where the bottom suddenly drops out of the market intraday.
The five-minute chart of the Dow from yesterday illustrates this nicely. A gap-up open churns around all day until the last hour of trade, at which point the rug is pulled and the market drops suddenly. This is something that traders have to be on the lookout for since when its happens it is not clear whether it is another random shakeout or the start of something more severe.
The rest of this report is available for Gilmo Report Members only.The full report will be available 45 days after it is posted. For immediate access: login
Gil Morales & Company, LLC (“GMC”), 8033 Sunset Boulevard, Suite 830, Los Angeles, California, 90046. GMC is a Registered Investment Adviser. This information is issued solely for informational purposes and does not constitute an offer to sell or a solicitation of an offer to buy securities. Information contained herein is based on sources which we believe to be reliable but is not guaranteed by us as being accurate and does not purport to be a complete statement or summary of available data. Past performance is not a guarantee, nor is it necessarily indicative, of future results. Opinions expressed herein are statements of our judgment as of the publication date and are subject to change without notice. Entities including but not limited to GMC, its members, officers, directors, employees, customers, agents, and affiliates may have a position, long or short, in the securities referred to herein, and/or other related securities, and may increase or decrease such position or take a contra position. Additional information is available upon written request. This publication is for clients of Gil Morales & Company, LLC. Reproduction without written permission is strictly prohibited and will be prosecuted to the full extent of the law. ©2008-2020 Gil Morales & Company, LLC. All rights reserved.