We've been looking at the MLB Contrarian markets and it's tracking Contrarian Fund and I mentioned that not all buy and sell signals have been roses in the games that follow them. We need to add other information to decide which signals are likely to give us the best results when we act or not act on them.
I know I've mentioned getting into EMA's but let's take the same type of technicals and not only zoom out for further signals, but also look at them as support and even resistance levels.
Here's the main 2020 Fund chart. I think we see a pullback/sideway market until we begin a take off in the playoffs. Last year we boomed in the playoffs and the signals were there. I think the market is ramping up for us again to enter the post season.
The first yellow highlight, on the left, is meant to show how resistance at the SMA 50 turns into support. The second highlight, the middle one, is meant to point out not only the lines crossing each other, but the support that is provided. The 50 crosses over the 100 and the 20 crosses that 50 and you see it's been an up market since.
The final yellow highlight, on the right is meant to show support at SMA 100 and the bounce off for a sharp rise. Note that it's the same level as the other highlighted support...
To get the backbone chart we needed to add some plays, going back to last years markets. Again we see suport at crossing lines lead to a rise in the first highlight and a bounce of of SMA 100 before the sharp rise.
Also note that the SMA 50 has crossed over the SMA 100, are we ramping up for a strong contrarian post season?
Finally, lets look at last year's chart.
Again, left to right, we see SMA 50 turn from resistance to support and the next two are meant to highlight support off of SMA 50. Notice after that last highlight's second support test, it rises, then pulls back to SMA 100 for a bounce. The bounce is important because while the SMA 20 was riding high SMA 50 was just about to cross SMA 100.
Next thing you know it's a runaway playoff market...
We can turn this game of checkers into a game of chess if we look at the right things and understand them from a market perspective...