After years of research, I’ve found, that often times, the market will know how to push the right button to distort the masses imputing fear (and not to mention this has been the most hated rally (since 2009) the mankind has ever seen since the stock market has been established). This is the time where people expect the worst, and words like “market crash” “financial collapse” and etc. are often heard. But the thing about that is, that’s old news. We’ve heard that all year long in 2014. We’ve heard that all the way since 2012 and all through the rally of 2013! So, whoever is shouting these shenanigans, they themselves have no idea, but just acting upon their emotions. It’s kind of like this, when I had this bad skin rash few summers ago, first thing came to my mind was, “SKIN CANCER!” because I have been tanning a lot in the sun on that summer. And, it could’ve been true, but found out after visiting the doctor that it was just a rare rash that will go away on its own in a month or so.
So let’s ask this question. Are we in a brink of a “financial collapse”? Possibly. But does anyone know this for sure? hmm.. I do not think so. One of the hardest endeavor in stock market is predicting “crash” or “collapse” without tangible evidences (price-action data). Just like we all get lucky sometimes, some trader/analyst might call things ahead of time like a prophet; but if you follow that trader/analyst for a while, you will soon find that they are calling many things all the time and sometimes they get few right. I happen to follow certain traders/analysts whom they have been calling the “market crash” over 2-years now–I’m sure they will get it right someday.
[Daily Line-Chart of IWM]
So let’s talk price-action and not fear or emotions.
As we look at the chart above, we can see that we are still in a territory of higher-low in the primary-term. It means this is the vicinity that if the buyers show up, it could be cultivated as next higher-low thus continuing with primary-term uptrend. And you might ask, that’s a big “IF”, Kay. And yea, that might be; but given the fact that this rising uptrend-support has been acting as strong support (see red circles) in late-2011, early-2013, and late-2014, I think buyers at least earned to receive “benefit of the doubt” as of today as we are back at this level.
No one truly knows if we are going to see a bounce here, just like no one truly knows if we are going see that “financial collapse”; but the difference is that we got something to work with, and that is, this is considered as strong and well-established rising uptrend-support level because it has acted as support in the past since late-2011. So, if I am wrong, I want to be completely wrong and I want market to tell me that I am wrong, so I think it will be very interesting to see how the market reacts in this vicinity next few weeks.
[NASDAQ – QQQ Daily Line-Chart “Fan Lines”]
Primary-Term uptrend is still in effect.