What Now Wednesday? Suddenly India And Pakistan Are Shooting At Each Other!

It's always something!

Early this morning, India and Pakistan shot down each other's planes and now what used to be the World's most likely place for nuclear war to break out is once again the World's most likely place for nuclear war to break out – which says a lot since Trump's finger is still on the button but he's been bumped to #2 by this new tussle.  

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This is still backlash from the terror attack on India, which killed 40 people we didn't care about on Valentine's Day and India retaliated and bombed what they claim was a Militant Base inside of Pakistan. We still sell arms to both countries, so this war is great for us! Actually, Pakistan already pissed off Trump and the GOP by switching to China as their main weapon supplier (much cheaper).

The Futures are already recovering from a sharp drop this morning as Nuclear War is way down on this Planet's list of things to worry about what with the planet boiling us alive and all the insects dying. If that doesn't bother us – what's a little background radiation going to do?  

What's really concerning is the S&P's repeated failure to hold 2,800, which still has us wondering if this whole rally is topping out 5% below the September highs (2,940) and, of course, the Russell is still unable to crack the 1,600 mark – which we said last week was a big problem.  In fact, I also said in last Wednesday's Morning Report:

We had an in-depth look at /RTY in yesterday's Live Member Chat Room where we concluded:

So, that being the case, we would expect the 5% Rule to be obeyed between 1,440 and 1,800 which is 360 points so 72-point bounce lines to 1,512 (weak), 1,584 (strong), 1,656, 1,728 (weak retrace – where we failed before) and 1,800.  So expect good resistance at 1,584 and no more than a strong retrace of that run from 1,440 (if we're bullish)  which is 144 so 29(ish) down to 1,555 (weak retrace) and 1,526 and we'll see how that goes.

In other words, our 5% Rule™ predicted a run to 1,584 and now the 200 dma is 1,587 so we're pretty confident taking a short up here with very tight stops over the line that risk a loss of $50 per point, per contract so let's say we call 1,580 the shorting line and 1,590 the stop (though I would add another short at 1,586 to average 1,583) so the risk would be losing 8 points over 1,590 ($400 per contract) and our pullback goal is 1,555, which is 25 points (from our initial entry) for a $1,250 per contract gain and possibly 1,526, for a total of $2,700 per contract at that level.

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Disclosure: Our teaching theme at Phil's Stock World is "Be the House, NOT the Gambler." Please see " more

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