Perception is all about time frames.  You may be right on a position, but it’s all about the time frame you trade in.  You may be right too early, and sometimes so early you can’t afford to be right.  

A lot of talk about the stock market going to shit has been happening for years.  You’ll hear a lot of shit talking and then when the market finally takes a shit, those that were short early on as the bulls ripped up will be saying, “I told you so.”  Some of them can afford it, but others can’t.  A good example of this is Bill Ackman and his short on Herbalife.  He had to close it at a loss as high as $740 million. 

So as I look at SPY/ES(futures) I see that we are obviously in an uptrend.  We’ve gone up ever since I called that I was looking for long opportunities. I was looking around the 2800 area on ES and we got close to 2796.  You can’t be too precise with targets because a lot of people see the same target and they try to get ahead of it.  The shorts got ahead of the 2800 area.  It was a good place to exit at gains, and now I’m looking to re-enter.  The direction is up for grabs. But let’s see the position we can swing on.  

As you can see on the daily chart above, we’re on the upper band of an uptrend.  The trend is your friend for the trend traders, so if you’re a trend trader, you should be BTFD!! (buying that fucking dip!) I’m a breakout trader…so I’m waiting for a break of a trend or range.  I know we need to go back to the blue line and look! It is at the top of the trend. My money is that we hit that that and from there, we breakout! Yay! New highs….

Ooooooooor we go back down from that spot, and the bulls get caught in a trap. Let’s not forget that next week is the start of earnings season, AND quite a bit of economic news is coming out in regards to trade and whatnot….soooooo we can go anywhere.  

Why time frames are important is that on the weekly, we have a rising wedge.  This has been a pattern that Wags and I have been capitalizing on lately.  Wags introduced me to shorting these shapes and I’m loving the new revenue stream.  On the weekly, you see that we’re getting close to the tightening area and it is right at the blue line on the daily chart where it should get tighter.  Most rising wedges end up in a nice short position and rarely, but sometimes, it shows a turn to the upside.   

I’m looking to go long above the blue line and to short of the rising wedge pattern on the weekly.  In the meantime, I’m riding the trend.  Keep in mind your timeframes and what you’re trading.  Don’t get too short too early or too long too early unless you can afford to be wrong for the timeframe.  Be flexible, be nimble, and most importantly, be profitable.  

-RM

After retracing all and more of a huge weekly gain Copper is looking interesting from a longer term trade standpoint. Looking at the daily Copper is testing trend support and in a support zone which has found buyers in the past. 

Zooming in on the 15min we can see the makings of a falling wedge that is just now breaking to the upside. A trade long at these levels with a stop below the support zone offers decent upside given the selloff is in part over exaggerated from the China tariff threats which, if anyone knows Trump’s negotiating style, is a bluff. China consumes roughly 40% of Copper for manufacturing so given the support zone and fears baked into the price, any rumors or news tariffs won’t materialize should aid in a quick short squeeze to the upside for the metal. 

After today’s move up CL_F should find resistance in the 65.89 to 66 area (the bottom of the cloud and horizontal resistance). So long as this area holds, we still view the move today as consolidation off of oversold levels and a back test of the broken bear flag with a continuation to a target of $62 area. The measured move of the larger Rising Wedge from the $72 levels. 

Gold is at an interesting intersection. Near longer term daily support trend line at backtest of broken trend resistance, a long with a stop loss just below trend support at 1277 or 1276 could offer a decent risk reward trade especially given the general markets are at frothy levels at the moment. Target to look for are a test of the bottom of the underside of consolidation at 1295, top of at 1307 and then 1322. 

All time highs, the Russell has rocketed ahead of the other indexes, except perhaps the Q’s, but what is the risk vs reward trade here. Looking at the weekly the last 10yrs or so have been epic and in the last month and a have the $IWM has jumped from 151 to 167 roughly almost without pause.

So is this sustainable? Is now the time to go long? I say no. Could the Russel grind a little higher? Sure, but what’s the best risk to reward trade here. The daily is in oversold territory with a slight bearish RSI divergence (the weekly is looking like an even bigger RSI divergence will occur this week) and the MACD momentum is starting to slow. 

Looking at this past month push up we can see a pretty clear Rising Wedge pattern. Although it has yet to break and could still grind higher, I feel the time is now to start building a short position versus going long here at all time highs. A measured move of the pattern is 100% roughly so a target of 151 but would need to assess on the way down. 

UPDATE 6/18

The Russell reached a new high today but futures pulled back in early Asian trading after President Trump threatened an additional $200B in tariffs targeted at China. The Rising Wedge formation still remans and small caps are finding resistance at the top of the range while testing and intra day breaking support but then recovering. This is a warning sign as every time a trend line is compromised it becomes weaker. Our game plan is still in tact; sell rallies for the eventual sustained break of support for a measured move down to 1531 area for this trade pattern. Looking at the 4hr chart of small cap futures we can see a clear bearish RSI divergence meaning the strength/validity of each higher high is weakening. 

It has been awhile since we called the rising wedge formation for CL_F with a measured move target of $62. WTI has come a long way but on a weekly basis didn’t really move this week other than up and down intraday. Wags still believes CL_F has been backtesting the broken channel support, now resistance, and CL will continue down to the target price. So far CL has found resistance along the former support and reacted on its first test of the 8day. I view this week as a sideways consolidation for the MAs to catch up after an extreme unwind and now can continue down so long as the 8day acts as resistance. 

Per our trade alert, Heating oil continued down and took out trend support as we predicted. HO is about to get an 8day MA cross of the 21day further adding downward pressure.

Target one is the horizontal support at 2.15 with a second target of the larger channel support coming in around 2.05 currently but will change as time and price change. 

If support is not found there we can pull out to the weekly chart to target the macro channel. Fib levels can also act as support levels and we will have to check the indicators as we approach major levels to determine the extent of the move. 

Since we identified the Rising Wedge pattern the WTI futures have gone from the mid $72 area to a close of 65.71 Friday. Currently, CL is sitting on a trend support line in the area of major horizontal support with the 100day a stone’s throw away.

Our measured move of the pattern break is the 62-62.60 area but given the extent of the move and the converging supports a pause and retest of trend resistance is warranted and or as well as horizontal resistance levels indicated.