Heres how to pick shorts on weak market sentiment using cycles
Presenting a strategy that anyone can use right away
There are about 1 to 2 weeks of buying that can contribute to an uptrend that moves prices higher on equities because of pressure from longer term cycles in the market.
The SPY 0.00%↑ is about 60 days out of 68 average into its 80 day cycle, and when it completes, it will be the middle of the 20 week cycle, and could be the last move higher before Spring, as prices settle into the coming 54 month cycle low.
The 54 month cycle up move can already be felt in the markets.
It may be that prices dont move lower into the coming end of the 80 day cycle in January. It doesnt have to move down if it already has the influence of the higher time frame cycles from the fundamental news.
My strategy is to always take short trades at the end of the 80 day cycle.
Use this especially on sectors/shares that have received bad news in the last 2 months.
This is the strategy:
Pick weak stocks (use new weekly lows watchlists… its easy)
find the 80 week cycle FLD projection for outstanding projections
measure the time left before the 80 week low and determine if its appropriate to short, using cycle math e.g. add up up waves and down waves: If its mid 80 week cycle, that means the 40 week and 20 week cycle is still pointing up, so there could be transaction risk (stop out)
Make sure to short after the expected peak, for instance, during the last 20 week cycle (there are four) of the 80 week cycle, pick the SECOND, 80 day cycle to short for safety
Find a good peak to short against and place your stop
risk 1% of account per sector-weak performer
Watch for correct action tool to short on (e.g. VTL or FLD and what cycle, e.g. 20 day FLD or 40 day VTL)
Wait for entry and take it
Stop out or take the 80 week FLD projection the whole way (at least 90% to target) moving stop down with each new 20 day peak.
Best regards
Derek Frazier