Labor Day Weekend: A Question of Time Frame… « The Daily DeMark





by dailydemark

Judging from the comments I have read on many blogs and articles, many are expecting any day now for the US to break from the continent and fall into the ocean. Currency collapse, debt, mortgaging our future, the Chinese, and other scary terms keep getting used in a liberal fashion.

On a long enough time frame, the odds of a currency collapse or governmental failure approach 100%. Yes, I’m very bearish on the dollar. Yes, I believe our government is run by evil buffoons who can’t see past the next election cycle. But just as it has taken 60 years for the bill to come due on this massive credit bubble, it might take a decade or longer to see the most catastrophic effects of our society’s fiscal improprieties. It could take even longer to see a recovery from it.

One thing that I do know is that the volatility caused by this bearish disagreement is giving traders an opportunity to move to shorter time frames. In a quieter market, moves of 5% and 10% might take weeks to develop; they are taking days now. For those with a well-tested system, the potential for enrichment is very real.

For those who don’t have the time or inclination to trade on a daily basis, this post is for you; it is my weekly review. Enjoy the following weekly charts:

Indexes

I mentioned last week that we were coming close to recording a new TD Sell Setup. A more conservative interpreter of DeMark’s rules would always trade based on the most recently completed Setup, as it contains the most recent data about the market. Any previous Setups would be canceled. We are in much more volatile times, thus I would prefer the more aggressive settings on my weekly charts, especially since I typically trade based on daily and hourly charts. I am a bit more cautious there.

This coming week’s trading sessions are going to have huge implications for the near-term direction of the markets. This situation is Game 7 of the NBA Finals; down by 3 with with two minutes to go in the Super Bowl. The winner this week “takes it all.” If we do close below $100 on SPY, the bears win by preventing the new Setup from recording. An 8 count followed by a flip is typically followed by a powerful move in the opposite direction. We would most certainly turn red on the TD REI, an indicator so powerful that I’m glad most don’t have it. What about the bulls? They are the underdogs, which is not to suggest that they have no momentum. I’m alluding to the fact that price is farther away from their target. which is right around $105. This the level that they have to breach to record a Sell Setup with a range that is larger than the previous sell setup. This is the more liberal setting which I subscribe to. If bulls do manage to breach that level, who knows where we would go next. The next upside TDST line on weekly bars is in the $120’s. The next upside targets for daily bars  are $108 and $112. I’ll cross that bridge when we get there.

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