Saturday, October 1, 2011

Adam Hewison: There Is Only One Word to Describe Q3 .... Volatility

It’s here! We’ve reached crunch time for the markets and portfolio managers everywhere. It is not often you have the weekly, monthly and quarterly markets all ending on the same day, but Q3 is playing out to that scenario.

I think there is only one word to describe Q3: volatility. Volatility ruled the markets and has pushed many investors to the sidelines. Conservatively, it is better to be in cash than be long the equity markets at the present time.

I find it hard to believe that some of the pundits say we can go into defensive stocks. My question would be why? Why be in the market when it’s going down? It just makes no sense to me.
The philosophy behind our Trade Triangle Technology is very simple.

We want to be long the market when it is going up and either short or out of the market when it is going down. The reality is the market can only do three things: it can go up, down, or sideways, that’s it! How many things in life do you know that are that simple?

Yesterday, we talked about the major trends in the markets and how important it is to know the direction of the trend for each and every market you have an interest in.

Let's see what our Trade Triangles are telling us about the crude oil market.....

Crude oil has been quite predictable. Tell me what the equity markets are going to do tomorrow, and I’ll tell you what the crude oil market will also do. This market is lower for the quarter and the month, but at the moment is slightly higher for the week. Our Trade Triangles are still indicating a very negative mode and we would not be surprised to see the $78 level tested again. A market close below $80 a barrel today, should be viewed as extremely negative for the crude oil. Intermediate and Long term traders should continue to be short the crude oil market.

Monthly Trade Triangles for Long Term Trends = Negative
Weekly Trade Triangles for Intermediate Term Trends = Negative
Daily Trade Triangles for Short Term Trends = Positive
Combined Strength of Trend Score = – 85

Check out Adams daily video on the six markets he publicly covers.

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