Looks like the market is ready to head south. Time to clean out longs.

Is this the pause that refreshes, or is this the pause that reverses the market back towards the lows?

I have said for some time that I was not that confident that this rally would continue as our long-term “Trade Triangle” remained in a negative mode. In my new video I outline the key areas that I believe will shape this market in the coming weeks and months.

The video features our “Trade Triangle” technology as well as our Fibonacci tools. I will also remind you of a concept that has been around for a while, but one that you might not be aware of.

No matter what happens, you are going to see some extraordinary markets and some wonderful opportunities to make money in the next 6-9 months.

Some investors may be hoping for the best, but be prepared as we might see another dive.
I highly recommend students of the market to take a few minutes and watch my latest video. Even if you’re a seasoned pro you may find what you see interesting and therefore profitable.

As always, my video come is complimentary with no strings attached.

Here’s To Profitable Trading,
-Steve
The Trade Detective

I’ve noticed since mid 2008, I get about 3 times more traffic on down days for the search term S&P 500 forecast.

Today, on a minimal down day, I have already received about 3 times normal traffic for S&P 500 forecast than a normal day. I would venture to say this indicates what’s really going on in the market better than any indicator, or market pundit you could ever follow

Sold on the close today at 52.18.
Total profit - 130 shares * $13.02 per share = $1692.6
Profit Percentage = 33%
Trade length - 9 days.

Probably his most famous video, entitled Why the Meltdown Should Have Surprised No One, opened my eyes to a very common sense approach to explaining economics, and, coincidentally, free market economies. The video is a real eye opener; if American’s would have just opened their eyes the could and should have seen economic and market crash coming 18 months ahead of time!

His common sense approach is on display here as well, where he directly refutes the Greenspan / Bernanke economic theory of cutting interest rates to stimulate the economy.

Peter is a student of Austrian economics, which when broken down to its basics, is a less is more approach. With clear and concise arguments that logically prove government intervention breaks the free market model and ruins economies, it’s hard to argue with this principle. Therefore, I decided to study the mechanics of Peter’s principles, and what I found is fascinating.

The first job of an economist is to tell governments what they cannot do.

Ludwig von Mises

The principle tenants of Peter’s plan.

1. Increase savings, eliminate revolving debt.

2. Become a net producer, increase manufacturing of real goods and exports.

3. Eliminate deficit spending

4. Allow the free market to work including:

1. No bailouts
2. No stimulus packages
3. Eliminate central bank control of interest rates (or the entire central bank itself)
4. No mortgage safety - real estate prices are still much too high
5. Massively reduce corporate regulation, allowing fear of loss / failure to become actual loss / failure

5. Drastically cut federal income taxes to spur savings and real production

6. Restore the value of our currency. Since 2002, the US dollar has been devalued by nearly 30%.

7. Reduce and eliminate borrowing from foreign countries.

Listen to Peter Schiff explain why the free market is superior to a federally regulated, and insured market:

Unlike the convoluted, academic economics that only the Harvard grads can claim to grasp, these concepts make sense:

Save more than you spend and produce more than you consume.

So let’s take a look at what happened to our economy, in retrospect:

How Do We Profit From This Knowledge

I’m currently working on a new rotational model for trading, and am building a custom tool that’s going to blow you away. Stay tuned!

update - got stopped out of our short position in the spy. Closed at 84.9 for a loss of $504.4.

The rest of the portfolio is working quite nicely:
Hott: (-$33)
SNDA: +942.50
LMDIA: + 435.50
FL: +1136.52
GIS: (-370.65)

New watch today on Proshares Ultra Semiconductor, symbol USD:

Lots’ of great things going on with this chart:
1 - Nice divergence in MACD, and RSI starting right after the January pullback
2 - OBV is increasing
3 - Green Monthly trade triangle on April 2nd
4 - +90 Score
5 - Rising 12 week moving average
6- 12 week SMA is just about to cross the 26 week MA

Click Here to Learn More About Marketclub Trade Triangle Technology and Fibonacci Technical Analysis

Entry - $18.32 above the current 26 week MA
Stop - will be 3% below the 26 week MA.
Target - 38.2% fibonacci retracement at 31.31

click to enlarge

For those of you who don’t know Peter, he’s a student of Austrian economics, and called the bubble bursting at the height of the markets in 2006. The quality you will immediately notice about Peter, is that his economic view and investment strategy is founded in simple logic.

In any case, notice how the CNBC drones are using some theoretical association of gold to inflation and copper to economic recovery. However Peter makes a very important point that America has lost site of, a service based economy is a house of cards, and America must get back to doing what we do best, producing.

We’re a nation of industry and innovation. These trumped up stimulus plans, federal interventions, and incessant printing of money by the treasury seek to prop up the very same house of cards that Clinton built with the .com era, and Bush built with the real estate bubble era.

So regardless of the academic nonsense that we’re seeing out of Washington, CNBC, and other news sources, there remains a couple of simple truths:

1. Inflation is going to rise, big time
2. Jobless rates will continue to increase
3. Our deficit is growing at record rates
4. The stock market is going to reach new lows.

The informed trader can still make a great profit in what remains of a strong bull market. Sure the main move is over, but there will be a final push on the S&P that will turn our short trades of the SPY into a nice profit.

Here’s to profitable trades:
-The Trade Detective