The Stock Market Holiday Bulge: Prepare for Selling
The stock market has wave-like patterns that form on a monthly basis and provide us with a steady stream of trading opportunities. One of the best swing-trading tools for timing these waves is the chart below provided by Barchart.com.
This chart rises as more stocks trade above their 20-day simple moving averages. When the majority of stocks are in a strong uptrend, a lot of people are trading in the same direction and the odds favor a temporary change in direction. These waves are great intermediate trends for swing trading and typically last multiple weeks at a time. This is one of the strategies I share with my subscribers to TheGoldAndOilGuy.com alert newsletter. Keep in mind, it's not as easy as it looks, because there are more moving parts to this equation, but you can see these extreme waves clearly in this chart.
With the stock market still firmly in an uptrend and firing on all cylinders, short-term analysis is pointing to a pause or pullback in the next week or two. I did forecast this exact price action several weeks ago and how it could lead to the start of a major market top. If a major top does form early in 2014 then we could make some big money once the selling begins.
Remember, stocks fall three to seven times faster than they rise, so once we get short, we can make massive gains quickly. While the masses (those schools of fish) are losing money, we'll be on the other side, watching our trading accounts skyrocket!
This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.
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