Someone Pulled The Rug Out From Under Us

What just happened? Someone pulled the rug out from under us. The bond market was warning of trouble, but we weren't listening. In my case, I wasn't listening because bonds have been warning for a long time and I didn't know if this was another false alarm.

I don't have any special insights into this market. I will just continue to execute my basic trading plan which is to buy when the PMO is at the bottom of the range, and lighten up when the PMO is at the top of the range. Over and over, I just do it. It never gets boring.

There was a bearish divergence at the highs that was a signal that the rally was losing steam, but we have all seen divergences a lot worse than this. Still, I wish I had taken it more seriously.

The trendlines have been broken although the NDX is still above its October 2019 break out level.

I am sure you are sick of seeing charts of just how oversold the market is. So I will only torture you with this one chart.

Last week I said that I thought that the GDXJ breakout had a high probability of success. Well, that was wrong.

I don't have too much more to add. I'm now in cash and I have no idea how the market will behave on Monday despite Friday's late-day rally.

I'll wait a few days, and then start to look for the next opportunities. I doubt that this is the time for me to be making longer-term stock commitments, so almost all the new purchases will be smaller companies breaking out of bases. And my holding period will be short-term.

We all think of bull market tops as being multi-month, huge rounded price patterns which would give us plenty of time to be prepared. Well, with so many people looking for that pattern, the market may have done just the opposite.
So is this the end of the 10Y bull market? Probably, but I don't know. The dust needs to settle before we get to that question.

I downgraded the long term outlook to "don't know" because this week's crash has thrown everything into question.

Outlook Summary

Looking for signs of the next short-term uptrend.

• The long-term outlook is don't know as of Feb-28 (downgrade from positive Jan-11).
• Sentiment favors higher prices as of Feb-07.
• The short-term trend is down as of Feb-21.  
• The medium-term trend for Treasury bonds is up as of Jan-25 (prices higher, yields lower). 

Strategy During a Bull Market

• Buy large-cap stocks and ETFs at the lows of the medium or short-term market trends
• Buy small-cap growth-stocks on breaks to new highs in the early stages of market trends
• Reduce buying when the market trend is at the top of the range
• Take partial profits when the market uptrend starts to struggle at the highs

Trader Discipline

• Never invest based on personal politics
• Take pride in sticking to the trading plan
• Don't give in to fear and greed&nbsp