Love / Hate Trade Breaking Out

Today we are seeing what appears in early trade as a confirmation that one of our favorite trade ideas is breaking out….


See chart here:

Further thoughts at midday..

The most important thing at this point for the contrarian view, You have to believe you are right, we are still very early in this market rollover. To be a contrarian you have to keep in mind that you are fighting the FED plus the huge crowd of FED followers that have piled up huge long positions. Those positions were based, not on fundamental economic analysis, but solely on a belief that the FED would throw out unbelievable amounts of free money. The players with huge margin positions will be the first to fall.

With that said we still are waiting for some key 50 day moving averages to roll over (trading below the 50 day average is important but is not a confirmation of a rollover, you have to see decisive moving average roll downs). So this may be volatile but you have to BELIEVE the FED went way overboard, in a sense follow the reverse of what worked since August 2020.

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