“Discretion is the better part of valor” comes from a twist of Shakespeare’s play, Henry IV, part I, when Falstaff says thus: “…The better part of valor is discretion, in which better part I have saved my life.”
As traders, we all agonize over every forecast we make, every projected date, every move, at every moment. But here in these market notes, we memorialize for all to see our unique analytical imperfections. But when we do a forecast, we think of Theodore Roosevelt’s “Man in the Arena” speech before the Sorbonne in the year 1910 and this essential part:
"It is not the critic who counts. ... The credit belongs to the man who is actually in the arena; whose face is marred by the dust and sweat and blood; who strives valiantly ... who, at worst, if he fails, at least fails while daring greatly; so that his place shall never be with those cold and timid souls who know neither victory nor defeat."
Note: We do not pretend to be in TR’s class in education, experience, zest for his craft, or his love for life. We stand in awe. Having put ourselves into the arena, we strive to create an accurate, educational product of added value for our readers. We hope we rise to the occasion, at least now and then.
Standing aside to analyze is something we have found to be indispensable in our trading. None of us have to be in the arena at all times. Stepping out of a trade that is not performing as expected can bring clarity and unbiased analysis.
Given the reversal Monday that left a hammer in the S&P 500 and a significant tail on the chart, we wondered if that was a successful test. And we wondered would the market follow through to the upside? We waited, and we watched. Tuesday’s action appeared to be a test of the tail for the S&P 500. The NASDAQ composite hit a new low for the year, but it wasn’t confirmed by either the S&P or the DJIA doing the same, a potential positive divergence,
As our readers will remember, using the master cycle, we projected a high for Friday the 22nd of April plus or minus one trading day. The high came in a classic bearish reversal on Thursday, with the S&P up in the morning and down big in the afternoon. So, the cycle came in as expected. From there, we anticipated a low in late April to early May. A follow-through day to the upside would negate our view. As of this writing, that has not happened.
The master cycle shows a low coming in on Sunday, May 1st. Two other related cycles bottom in this time period, April 30th and May 3rd. On an esoteric level, we also have a partial eclipse of the sun on Saturday the 30th. Maybe something, maybe nothing, but we do keep track of these things as we have noted over the years that significant turns in markets have coincided with these solar-lunar events. Case in point, August 21, 2017, a total solar eclipse that spanned the entirety of the continental U.S. That eclipse coincided with a significant low for equities. Again, the master cycle declines until late June in the big picture. But for now, we anticipate a short-term tradeable low on either Friday, April 29, or Monday, May 2nd, with a rally into the May 16th period.
Trade well and stay safe. JHS
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