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Little Room for Contrarians as Year Ends

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After watching the bull market break all the rules for the last ten years, we know better than to think that even the most formidable-looking technical barrier will slow it down for more than a day or two. Indeed, seldom have we seen prices fall for three consecutive days — a rarity even in the good old days. (Old-timers may recall that the October 1987 crash, when many traders might have thought the world was ending, lasted but for two full days and a fraction of a third.) Still, it would be careless to ignore the double barrier which stopped the DJIA’s ascent on Friday: a Hidden Pivot resistance and a trendline that both trace back to the first quarter of 2019.  Instead of getting all worked up about the prospect of a healthy correction to end the year, however, we’ll simply assume that bulls are capable of holding things steady for at least a few more days, come what may. Since everyone expects this, or perhaps a continuation of December’s wilding spree, we should be on our guard against a (very) contrarian surprise.

Please do not ask trading questions!

  • John Jay December 30, 2019, 9:50 am

    As the New Year approaches, it is once again Time To Laugh!
    Let’s laugh at the Wall Street Algo’s hair trigger response to anything related to the Trump-China Trade War!
    First, a little historical perspective.
    In all of 1985 the US had a $6 million Dollar trade deficit with China.
    In all of 2018 that trade deficit with China stood at $ 419 billion.
    Now, in view of that 33 year the “Trend is Your Friend” evidence…………………………….
    Can any rational person think China is ever going to make any serious effort to reverse that situation?
    If China sets their tariffs on US made imports to China at zero…………………..
    But uses their “Social Credit” pressure to effectively prohibit their denizens from buying American………………..
    Well to use a racial stereotype used in old Warner Brothers WWII war dramas, aimed at the Japanese…………….
    “Ah, So Sorry, in spite of our best efforts, our people are not interested in Buying American, we tried!”
    Just another Punch and Judy puppet show that DC/Beijing insiders front run to clean up in the Markets!
    LOL!

    https://www.census.gov/foreign-trade/balance/c5700.html#1985

  • Ken Hilliard December 29, 2019, 10:53 pm

    I was a follower of David Elliott years ago, he showed me a daily chart from ’87 crash straight down to 1000 sma daily and bounced.