From the Upper Left to Lower Right
Two comments this past weekend at TradingMarkets2000
sort of ring in my ears. Want to know if the market is in a downtrend?
Here’s how you figure it out.
- Jeff Cooper: “The market is going from the upper left-hand corner of
the screen to the lower right-hand corner of the screen.” - Dave Landry: “Ask a six-year-old.”
The message here is that getting a handle on what the trend is is pretty
easy. My own experience is that it takes a while for a trend to become obvious.
But by the time it’s easily recognizable, you’ve often missed a good chunk of
it.Â
Today in the Nasdaq, we have an easily identifiable trend. Personally, I
think the use of the label “bear market” is a little debilitating
psychologically. People have in their minds that bear markets can last months or
even years. To label this a “bear market” may give you some false
assumptions about the longevity of the current move. Let’s continue to look
at it a day at a time.
What will become readily apparent from the chart of the Nasdaq I’m showing
you today is that we are in a downtrend. The price action fits neatly into a
downtrending channel
Now how seriously I take a trend channel usually depends upon the number of
touch points I see. The safest confirmation of a trendline is three touch
points. Two is a little chancy, although I will sometimes consider using them in
special circumstances.
I take this downtrending channel in the Nasdaq seriously.
To answer your next question–you already know my answer: I don’t know. But
certainly the bottom of the trend channel could be where you’d see a major
bounce if the May lows are broken.
Till Wednesday,