Leaders Index 6-7

[Riskslayer]

Thanks for your work here Jerry! I have been following you for some time and appreciate you and Mike Scott's work on CANSLIM.

I subscribe to the Minervini service which is a substantial variation on CANSLIM, but similar; MM sees the current action as a correction within a long term bull phase, albeit a late stage bull market. All of the market metrics that I follow, based on MM's risk model, are quite negative (the worst in 6 months).

Its dangerous to my mental mindset to think too much about predictions, but the markets are slow these days ... so ..

I am looking at an undercut (1% or so) of Apr 18 lows (6-7% correction); or an undercut of Mar 16 lows (10-11%), or an undercut of Nov 16 of lows (15-16%) ...

How are you coming up with 8%? I assume historical data abot 75% of all corrections being contained to about 8%?

Thanks

Shawn

[Mike]

Thanks for your work here Jerry! I have been following you for some time and appreciate you and Mike Scott's work on CANSLIM.

I subscribe to the Minervini service which is a substantial variation on CANSLIM, but similar; MM sees the current action as a correction within a long term bull phase, albeit a late stage bull market. All of the market metrics that I follow, based on MM's risk model, are quite negative (the worst in 6 months).

Its dangerous to my mental mindset to think too much about predictions, but the markets are slow these days ... so ..

I am looking at an undercut (1% or so) of Apr 18 lows (6-7% correction); or an undercut of Mar 16 lows (10-11%), or an undercut of Nov 16 of lows (15-16%) ...

How are you coming up with 8%? I assume historical data abot 75% of all corrections being contained to about 8%?

Thanks

Shawn

The market seems dangerous to me also and just for the reasons you state Shawn, historically most corrections are contained by 8%, that is a key level to watch . A failure could mean slipping into bear market territory or your 15%-16% territory.

The major indices have been building a possible head and shoulders pattern. A right shoulder hasn't formed yet. Let's say we get a weak rally and form a right shoulder. This could be the optimum shorting opportunity. There are two possible H&S patterns to look at. A narrow one with left shoulder in February of this year and a much larger one with left shoulder in April 2010. The market based on Shiller ten-year average S&P500 PE is grossly overvalued and the large H&S pattern could gain traction over the next 6-12 months.
I remain in cash for now with a watch list built of shorting opportunities. A long watch list will probably be built over the coming weekend. At any particular time in a correction we could be 4-days away from a confirmed rally.