SOXX: Textbook Top?

11:48 a.m., EST

By The Book?

SOXX chart: Like something from a book on trading

Price action’s struggling at new highs. MACD’s posting a bearish divergence. Can it get any better for the shorts?

(not advice, not a recommendation)

At least one thing missing (as of this post) is a new daily low. If we get that, it helps provide confirmation of a SOXX, top.

The S&P (SPY ) and the Dow (DIA), have both posted new daily lows as has the Russell 2000 (IWM).

We can also throw in Basic Materials DJUSBM (IYM), making a new daily low.

Recall in a previous update, empirical observation over the years; market tops tend to occur before, during, or just after a holiday week.

Looks like we may be there.

Stay Tuned

Charts by StockCharts

Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.

If you want to get rich …

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If you want to get rich, you have to go broke first.  Maybe you’ll have to go broke several times.

It seems this step is an invariable requirement in the acquisition of wealth.  The market masters of the early 1900’s went broke.  Speculators like Livermore, Keene and Wyckoff.

Even Robert Prechter of Elliott Wave International has stated as much in his interviews; He puts it a little differently:

‘Be sure to lose your first fortune(s) early … so that you have time to recover.’

Note his inference on ‘recovery’.  Winners recover.  Losers recount.

I have an acquaintance that wants to begin trading in earnest; searching to gain significant wealth.  He’s already had a successful career having been a weapons officer in the Air Force and later, an aerospace engineer.

Now, he asks me market questions, the answers to which require that he invest countless hours (and possibly years) of study and dedication to learning the craft.

After a recent barrage of such questions and in a sense of exasperation, I simply said:

“If you want to learn about the markets, the best way to do that is to start losing money.”

How much better it would have been for my own firm to have understood that fact.  We would have set up at least three separate trading accounts … the first two of which were expected to go to zero.

If by that time (the third account), a concise plan had not been developed, well then, one can at least decide to exit the profession altogether having lost only 2/3rds of one’s wealth instead of it all.

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