This week’s question from my VIP Coaching Program comes from someone who wishes to remain anonymous.
This Week’s Question:
Hi Ron,
With 2 distribution days is the NASDAQ Composite a classic double top?
Ron’s Answer:
Thanks for this great question!
I never look for double tops. I simply count and track distribution days. As of today, three, which is a green light.
I suspect the market is geared for a financials run, along with continued strength in tech and some others.
Charts are trading very healthy and the old school big cap index stocks like MSFT, GOOG, AMZN, AAPL and others are fine as of today (8/25/16).
Bank and credit cards look strong, V, MA, JPM, PYPL, GS. Notice the big weekly consolidation for over a year on most of these, minus GS, which was a perfect Triple Tank on a weekly basis, with leg three on the weekly being a perfect Triple Tank itself.
These may or may not go, possibly based on Fed today and tomorrow. But even if they decline in the next few days, I’d be watching them closely after Labor Day. A new month has a way of changing things.
Oil and gas appears to be on the mend and is now is an uptrend that is consolidating. UNG, UGAZ. Compare these to the 2002-2003 market bottom in the Model Book. They are very similar, except for the fact we only have two declines in them right now. If they decline one more time, we likely have a major bottom taking place in natural gas. Where these are right now would be very near the beginning of March in the 2003 chart of the NASDAQ. Walk backwards and compare them going back to the August, 2002 rally on the NASDAQ that failed into a Triple Tank that led to the October, 2002 bottom.
There are 10 Triple Tank stocks that hit their bottoms and made their turns on the Brexit news and 9 of 10 are still doing well. Add them to the ones in February and now you have 18 out of 20 Triple Tank’s doing well. Only two rallied for several weeks and failed on earnings news. But even those two shouldn’t have cost you a penny, handled correctly.
My best advice is to follow the system, pretend the news world doesn’t exist. Follow the charts like a doctor follows his x-rays, you’ll never go wrong. The news will promote doom and gloom, but the market will not wait for the news to get better and will leave you behind if you are waiting for the news to sound promising.
Read Chapter 8, One Deadly Sin You Must Avoid: News, You Lose! of my book, where I share why the news will never guide you to a good investment decision.
Click here to download your free digital copy.
Learn how to become a “BULLETPROOF” Investor, read my book “The Moses of Wall Street.”
