CGTS FRIDAY: IS THIS A BEAR TRAP?

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Long/Short Equity, Special Situations, Currencies

Contributor Since 2009

Michael J. Clark was born and raised in Sinclair, Wyoming. He is a poet, novelist, artist, historian, and market analyst. He began investing in 1985. He read ˜The Technical Analysis of Stock Trends" by Edwards and Magee and was hooked. From 1985-1987 he made astonishing gains in the stock market; and then stocks collapsed in 1987. Since then he has been attempting to 'solve the stock market', with many failures and some successes. The system he developed, called CGTS, Clark's Gate Timining System, is algorithm-based. What this fancy word means is that he proposes a series of necessary steps based on technical analysis propositions, which, when met, trigger trading signals. His four main trading systems are up a combined 31% for 2015. From his website: INVESTMENT PHILOSOPHY Now that QE is supposedly ending, markets are already becoming more tradable, with opportunities to make money on both long and short trades at the same time. QE tended to make all boats rise, except precious metals. This made it more difficult to play the short side of the markets. Now, both sides seem to be more accessible to successful trades. This will also be more of a challenge for investors. The FED will have to eventually abandon the markets to their own destinies, and stop spending trillions to protect investors AND corporations from their mistakes. As this begins to happen (I am not sure it has happened yet), informed advice will become even more necessary for investors. Rules of Investment Rule #1: Never go against the trend. The majority is often wrong; but the minority is often wrong also. The sticky issue with this advice is at transition points, at which a Bull Market turns into a Bear Market or vice-versa. Big Money often anticipates and/or causes this transition. So pay attention to what Big Money is really doing, not what they say they are doing. Rule #2: You don’t need a broker who makes his living off of your money. Most brokerage firms buy a position in a stock quietly and slowly. When the stock has appreciated significantly they add the stock to their buy recommendations. Then they begin selling their position while they are encouraging their clients to buy the stock. Most firms never issue sell recommendations. If they do, beware: they are probably trying to buy your stock after a huge sell-off. Rule #3: Watch your own emotions because they are often signaling something. When fear turns to greed and visions of unlimited wealth, we are probably near a top in a trade and we should get ready to sell. When hope and denial turn to fear and visions of an unlimited loss, we are probably approaching a bottom in a trade. (See Rule #1 however.) Rule #4: Trade with a system to complement your gut reactions. Follow the system no matter what, even if it means taking a loss. Don’t get lazy with your money and sink into denial. Use a system to help you refrain from 'playing a hunch'. Rule #5: HEDGE YOUR PORTFOLIO AGAINST LOSSES. How does one do this? By having a balanced portfolio of long and short positions. But have a system that signals both long and short positions, and keep your portfolio balanced around 50% long and 50% short. This may seem to contradict Rule #1. It does not. When something is in a long trend, something else is in a short trend. Find what is long and what is short. If stocks are long, gold or oil may be short. Use ETFs and options to help establish this portfolio balance. Our system gives trading signals every day for both long and short positions. More information on CGTS is available at: http://home.mindspring.com/~mclark7/CGTS142.htm His fine arts portfolio can be found at the following address: http://www.hoalantrangallery.com/MJC2.htm His writing portfolio can be found at: http://www.hoalantrangallery.com/MJCwriting.htm Those interested in his book "Turn Out the Lights", a description of the metaphysical causes of the 2008 financial meltdown, can access the draft at: http://www.hoalantrangallery.com/Turnoutlights.htm Michael Clark has retired after working 30 years in academia, relocated to Hanoi, Vietnam for six years, and has returned to America in 2014.


CGTS: THE NEW SCIENCE OF INVESTING

CGTS Algo Trading System

byMichael Clark

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CGTS FRIDAY: SHORTSELL SIGNAL ON MU, MICRON? DID THE FED CAVE OR NOT?

Feb. 1, 2019 7:43 PM ET•MU, UGAZComment!

mjc f

As I suggested yesterday, the FED caving in my not be a good sign for the markets. It may be signalling the FED's concern that a recession is at hand.

VALUATION anyone? Are you buying earnings or the fact that the FED seems trapped by the Market (and the politics of the market)?

FED hesitation is a hearty brew for bulls. But they need to be seeing clearly. It is very unlikely (impossible?) that the FED will follow the 2001-2014 FED pathway should another recession hit, propping up markets and gifting trillions to the country's super rich on Wall Street and in tax havens. That type of theft from the taxpayer will create a revolt in America, with politicians taking the leftist populist track of blaming the rich and attempting to emulate Venezuela.

Which makes me think it might be time for a HEADLINE RUN (thanks, ZeroHedge). Yes, this is a pessimist's guide to reality; I understand that. But we need to be aware of both sides of the equation.

I have predicted the 2019-2037 fragmentation of the Democratic Party into rival splinter parties -- and it appears that Howard Schultz, Mister Starbucks, has started this process.

Schultz, in fact, worked his way up from utter poverty as a boy to a billionaire today. He IS the American Dream. It is astonishing to watch Democratic loyalists and Trump-Haters besieging Starbucks and Schultz with accusations and threats. The splintering has started.

The pivot toward socialism has been caused by the utter greed of the right and the siphoning of trillions of dollars out of the American treasury and the future treasury to the world's richest DRAGONS OF THE HORDE (Wall Street). Jamie Dimon says he's very willing to pay much more in taxes. What is the alternative? Civil war?

Ok. That is the Bear side of the equation.

CGTS TRADE OF THE DAY.

Hybrid AAAA Trading System, which ignores all short-term trading signals, is giving us a new signal today. SHORT UGAZ. In fact nearly all of our trading systems are giving the same signal. (It makes me think the FED Dollar sacrifice is not yet a done-deal).

How does this system trade so far on paper?

As one can see, AKAO is also a BUY in this system.

SHORT DRV; LONG DRN -- bullish Real Estate.

We have friends trading MU and we promised to keep them up-to-date on this. We have a trading system that has worked wonderfully on low-priced stocks that we are testing for all stocks.

This system is giving us A LOT of SHORTSELL SIGNALS. What do we make of it? Oh, yes, MU is a NEW SHORT according to this system.

All the issues with single red dots to the right of the column are new SHORTS today. Those with two red dots were SHORTS yesterday. Three red dots were new SHORTS on Wednesday.

This system is telling us that the BEAR TRAP trade is ending. Is this system to be trusted? I don't know. We are still testing it in real time.

Arguably our best trading system is HYBRID AAA, so far. We will continue to trade but our focus is also shifdting to long-term trades with HYBRID AAAA.

Have a good weekend.

MJC, CGTS

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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