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New Year... More Pain?

FacePlant (2).jpg

What’s In Store 2019?

The best case scenario for any Trader is to be on the correct side of the Market (and Yes, I do consider Cash to be on the correct side also)… and many of you have reached out and thanked me for helping to preserve your Capital positions these last few months, which I appreciate, but the question we must ask ourselves… What ‘s in store for 2019? Do we continue to Face Plant? or do we move forward with songbirds and happiness?

Let me begin by saying… nobody knows for certain… there’s no such thing as 100% certainty in the Financial Markets, but when I’m asked how I seen the Market Correction last February coming, and how I seen the October decline coming, the answer is actually pretty simple because Technical Analysis presents us with information, and it’s through the analysis of this data, that we can begin to formulate a thesis, and I like to think my decision making is pretty sound.

Whether it’s highlighting 79 Trades Ideas for last year, with a potential 1,404% (17.7% Average per Trade Idea) or whether it’s analyzing the Market to give everyone plenty warning as to what is going to happen next… Technical Analysis does it for me, it’s really just a case of knowing where to look and how to put it all together.

As I write this, it’s the 2nd January 2019, and the Stock Market has seen a bit of a rally over this last week (since Christmas), but what you won’t see broadcast by the talking heads in the Financial media is this…. the market rally has taken shape on LOW Volume whilst all the big guns (the Hedge Funds etc) are off on their Christmas Jollies… what we’re seeing is simply Retail Trader sentiment play out.

As I’ve mentioned in previous articles, the biggest Market Rallies occur in clear down trends, and I’m not seeing (at the moment) anything that is massively forcing me to reconsider my bearish thesis. I think we move lower, and I think we move substantially lower… because that’s what the weight of the evidence is telling us (at the moment).

I’m not naive, I think I’ve demonstrated that over the last 18 months, I will ALWAYS reconsider my thesis the second I’m told otherwise from the Technical’s, and this approach serves me pretty well for the most part because I’m not stubborn, I’m not closed off to alternative views, and I will always weigh up the balance of evidence before presenting to anyone and given we should be aware that large volume will be back on Monday, these are the key levels I’ll be watching, but I need to say this to absolutely everyone… we’re CURRENTLY in a bearish environment.

If you don’t understand Technical Analysis fully, or if you would like a little help… there’s a link at the end of this analysis for you.

Exhibit A - The DOW

Dow 2nd Jan 2019.png


The Dow has taken a huge beating after hours on the news that Apple (AAPL) is in a bit of distress, this probably isn’t great for the Market, and with Wall Street coming back on Monday, it’s going to give us a better picture of what’s in store, but it still amazes me these announcements occur on critical Market Support / Resistance Levels.

I think we’ve got to be bearish the overall Market whilst the Dow is trading below that clear support level, and it certainly looks like we have Polarity (Support turning into Resistance), so this is why Wall Street coming back to work is such a big deal… do we see further declines, or do we see a rally back into that zone which is in the middle of no mans land?

Exhibit B - The Russell 2000 (IWM)

Russell 2000 3rd Jan 2019.png


Again, we’re at a very clear level in the Market for a basket of 2000 Stocks, and you’ll see from the chart (and previous analysis that I was 100% correct, which reaped good profits for those that traded the move and knew where to look… it makes sense to me once more, that if 2000 Stocks fail at a key price level, and if the most important index of them all (the DOW) fails also, that’s not good news for the market, and I think we see a 10% Market drop, which will have a significant effect on the individual components (the stocks) of those indices.

HOWEVER - IF we see a move to the upside and we move beyond those key price levels, that might well be the catalyst for incredible buying action to trigger a market recovery, so please don’t underestimate the significance the next week holds… we’re at key levels… and it can go either way… I’m currently bearish, and will proceed as such, but there is certainly a glimmer of hope for Bulls at the moment

If you’re out there, and trapped in Buy Positions you can’t escape, or if you’re a Trader that doesn’t like the psychological shift that shorting stocks gives us, then it might be a good idea to hold fire until we see what Price is telling us, there’s a glimmer of hope, but that hope could be gone by Monday.

For those that don’t understand Technical Analysis and are losing, and those that are perhaps doing badly at the moment, all you need to do is get in touch… I can probably help… provided you’re teachable / decisive and prepared to drop bad habits.

Are you sick of endless losses?

Sam McCallumComment