Thursday, March 5, 2015

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Question:

Hi Eric,

I am in my 3rd year of subscribing to your web site...thanks for your work! I have a question:

While many of us (me included) have memories of how awful the stock market was from 06/30/08 to 03/06/09, the market has basically gone straight up since then with the exception of the third quarter of 2011 (I believe the Russell 2000 was down more than 20% that quarter). While following your work, it has been demonstrated that the trend is up; however, no market goes in a straight line. Are there any signs that we could have a short term pullback similar to what was experienced during 3Q11? How does the current market stack up versus where the market was just prior to 3Q11?

Thanks, JB

Answer

Correct, other than markets entering phase transition, they rarely trade in straight line. This is why we follow the message of the market - price, leverage, and time.

Jim Croce nailed when he wrote

You don't tug on superman's cape
You don't spit into the wind
You don't pull the mask off that old lone ranger
And you don't mess around with Jim

Might as well add you reduce risk when trend oscillators dip below zero (chart).

Chart


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