At this point I am 99% certain that the wave 2 correction is underway. As stated several times on this blog my targets for the wave 2 bottom is in the 725-750 range. This wave 2 should take an ABC shape. That is a five wave structure down, followed by a 3 wave B up and finally another 5 waves down for C. Time frame should be 2-3 weeks, but this is really just a guess.
Going short from here is a low risk-high reward play. The inverse leveraged etf's will be porfitable, but caution should be used in exiting the positions near the top end of the range listed above.
There are several signs that the bottom of this wave may be closer to the 750, even 765 range than the 725. I'll keep monitoring these signs. I am playing this by shorting mostly the financials and RE. I will begin scaling out of my positions near 775 unless I get signals that the retrace should be deeper. I will keep all of you informed of course.
Once wave 2 down completes we will begin wave 3. Tentative targets for this are over 1000. This wave will be the easiest wave to play in the next several years. This is the period in which one can literally throw a dart at a list of stocks and make money. However by choosing the right plays one can make MORE money! This is still several weeks away and most of the major moves will be in late spring or early summer.
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I bought some crack aka FAZ today. Already up +15% on it. Fundamentals suggest things should go down from here and that is supported by Solwold's technical analysis. Wait until the regional banks start reporting. CRE and C&I lending is about to get shiz kicked and the regionals are the ones with all of that. No way MI should be in business!
ReplyDeleteGreat job on FAZ. My target for FAZ in the next two weeks is $40-$50. That's a nice little return for a couple of weeks. Keep a close eye on it though. If things were to reverse unexpectedly you could get creamed. A stoploss order near $9 is a good idea. Also don't be afraid to lock in partial profits in the $30's. No need to get piggy.
ReplyDeleteFYI if you want to play the impending RE doom, SRS is the 2x inverse real estate play. Even though it is 2x it is unbelieveably volatile. It is like crack junior.
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