Want to know which way the market is going? Watch this video and you will know with 100% certainty. Guaranteed. * (May 21, 2014)

by DAN
I’m going to do a little departure here on the Chart of the Day and you feel free to tweet this out to ‘Tweeterville’ all you want. I’ve got a real issue with these folks who say there’s a world renowned market timer who just the other day was on CNBC saying that we were right in the middle of a correction. We’re not right in the middle of a correction, not even close. There’s no such thing as being in the middle of a correction when the S&P is within 1 percent of it’s all time high, which it just hit last week.

The Russell 2000, this is where it all begins and ends, the Russell 2000 is down 9 percent from its highs here. Okay fine, 9 percent, well frankly, if you really want to get anal retentive and lets do that, a correction is only deemed to be a correction when it’s down 10 percent. So even the Russell, that red-headed step child of indexes, is not even into quote “correction territory” and it’s kind of showing signs of support here at about 1100.00 or so, right where you’d expect it to. So the Russell, that’s not working for me,

How about those dreaded Midcaps? Wow! The dreaded Midcaps are also off their highs, 3 percent. So let me get this straight, the S&P is basically at its all time highs, the Russell is down 9 percent, that’s as bad as it gets, the Midcaps are down 3 percent, but lets look at those nasty transports they’ve got to be diverging. Well actually Horshack, no, they hit an all time high on Monday, now they’re off by less than half a percent from that. And then how about the Nasdaq because we know how that’s been sucking, well actually that’s down 5.5 percent, see in the upper left-hand corner where is says 5.49 percent there, annualize, that’s down 23 percent.

What I’m saying is, if you’re saying we’re in the middle of a market correction then dude what you’re really trying to do is get a reputation as a market timer. If this is your idea of a correction you already have a reputation as a market timer, it’s just as a bad one. Here’s the deal, the Nasdaq, this is looking pretty stinking bullish to me, look, we’ve got more people on disability than ever before and it’s not because they’re all disabled, it’s because they’re employment disabled, not all of them so please save the hate emails for somebody who cares, but what I’m saying is, we’ve got a lot of negative things going on out there that are every reason for the market to be going down, but it’s not, it is moving sideways.

You could say, “But this is a symmetrical triangle and this can lead to more downside.” Yes it could and when we get below 4000.00 then I will say, “You know what, now we’re in the middle of a correction.” I don’t predict, I manage risk, and I think there’s just as much risk if not more risk of missing out on the upside than there is of getting caught on the downside. By the way, do you know how you can mitigate this risk on the downside? Use stops, that’s it, you don’t have to be right; you just have to be disciplined. So look here, we’ve got the Nasdaq literally close to breaking out, will it, I don’t know; if I did I wouldn’t be telling you I would be running a million dollar hedge fund in the Cayman Islands, probably from my own island.

But I can tell you this, this is a bullish setup, when you’ve got the S&P looking like this; I was on CNBC last Friday talking about how the healthiest thing for this market would be for it to grind sideways for a while and basically bore everybody to tears. That’s really what I’m talking about, we’re drifting sideways here; this is not a correction, and then I hear, “All these trend lines are broken,” that’s not a broken trendline for me. By the way, I’m more worried about this trendline, that’s what I’m worried about, but we still have time for it to confirm this. So am I getting a little hot under the collar? Yes, do you know why? Because my loyalty is to you, not to my own reputation, I want to keep you in as long as there’s money to be made, and there’s money to be made.

This talk about being in the middle of a correction is just stupid. There I said it, nobody else does, we are not in the middle of a correction; we are in sideways consolidation. You want to go for the large caps; I’ve been saying this before. Look at the XLI, I could go on and on and on; you want to go large caps. What the heck is wrong with the railroads, the only thing wrong with the railroads is, you don’t own enough of them, they’re all working. I could go on and on and on. I haven’t even looked at this chart but I have a feeling I know what it’s going to show; even biotech, look at this, I haven’t been a fan of biotech basically ever since it broke down, I’m fickle that way, I don’t like the teams that lose the Super Bowl either, unless they’re the 49ers; so we’ve got a triangle here. Could we see more downside? Sure. Will we? You know what, I doubt it.

This is trending sideways enough to where you know what’s going to happen? If biotechs start breaking out to the upside what do you think is going to happen? OMG, all of the sudden all those folks who were cautious on the market are going to be ‘biotechians’ again; they’re going to love Celldex ( NASDAQ:CLDX ) and Celgene ( NASDAQ:CELG ), Amgen ( NASDAQ:AMGN ), Gilead ( NASDAQ:GILD, they’re going to be all over them again. I’m telling you this is what you want to watch; if this starts breaking out you need to be there. Should you be there now? No, because it could break down, the thing could fall down here and that would be known as a bad thing. I want you to stay in the game, listen to this; do you know what this is? This is the sound of me pounding the table saying you need to stay in the game. If you’re losing money then frankly join the club, honestly, my trading hasn’t been that great this year. I’ve been involved in a bunch of other stuff, I wish I could just be sitting here watching the screen all day long, but I haven’t been, there, nobody else will tell you that either.

But my analysis, my trading has been okay; it’s just not been up to what my usual standards are, but my analysis has been pretty darn good. I’ve been bullish pretty much all the way up; do you know why? Because the market has not told me, or you that it’s time to be bearish. The only people that have told you that it’s time to be bearish are people that you don’t want to listen to anyway, because they’re typically wrong. There are some folks out there that are totally fadeable; when they’re bullish you need to be bearish; when they’re bearish you need to buy, buy, buy. It happens all the time. What I’m saying is, you look at these charts and as long as you see these stocks and indexes up in the winners circle, that’s where you want to be, you don’t want to see them down in the penalty box.

And by the way, when you see them down in the penalty box this is what you’ve got to be looking for, maybe it’s time to buy, maybe that downtrend is pretty much over. Well we’re not in that area, we’re still here, so frankly, in a perfect world, you shouldn’t be buying now you should already be long. If I want to be more intellectually honest what I’m really telling you is don’t sell. I’m going to assume that you are not listening to the world-renowned prognosticators and that you are instead watching the charts. By the way, feel free not to listen to me either, I’m an expressed non-fortune teller, I’m the Wizard of Oz behind the green microphone here; I’m telling you I don’t know which way the market is going, but I will also tell you this, which will be a contradiction, I know that the market is going higher, I know that it’s going higher, and I will be right every single time, every single time, I’ll bat a thousand when I tell you that the market is going higher, except that one time when I am wrong.

Now, who would you rather listen to, and which chart would you rather watch and trade along with, the one that’s right all the time except the one time that it’s wrong and then thank the good Lord for stops? Or would you rather look at the chart and anticipate every single turn, or listen to that person or those people, it’s not just one there’s a whole bunch of them out there. Would you rather listen to that person who is trying to make a reputation in calling the top? Me, I’d just rather make money, and that’s what I want you to do.

Free Chart