Last weekend’s Daily asked, “But what if there is a man behind the curtain who can make everything all better simply by bringing him the broomstick of the Wicked Witch? What might that look like this week?
We further queried, “Will anyone get close enough to the witch to throw water on her and melt her away? And if so, will bringing the Wizard the witch’s broomstick be enough? Is there still a rally “Somewhere Over the Rainbow?â€
Keeping with the film that has brought us the penultimate life and market metaphors, I call on Glinda, the Good Witch of the North. Floating into Oz in her beautiful bubble, she told us we always had the power to go home.
Both NASDAQ and the Russell 2000 handily surpassed a hearty area of resistance this last day of June. The year is officially half over and the Wicked Witch could at last be dead.
Hence, we begin the second half of 2016 with a long summer weekend and then return with a brand new six-month calendar range on the horizon!
By July 15th, (or after the first 10 trading days of July,) we will have a new six-month calendar range to trade from. It serves as a reliable indicator of the trading range to look at for the next 6 months until it resets next January.
That means after July 15th, we will have a range from which we can execute both longs and shorts from. We can either follow the direction of how that range breaks, or for a countertrade, fade when the top or bottom of the range fails.
With Brexit, an upcoming vote for a new British Prime Minister, our own Presidential election, rising commodity prices and any and everything else that can potentially emerge from our volatile and constantly changing world, the six-month calendar range makes for a solid blueprint.
How did the January 6-month calendar range work out?
Looking at the Russell’s alone, well. It told us to be short out of the gate in January. Once it crossed back above the low, it told us to fade and go long. A bit choppy throughout April, by mid-May it signaled a long. Presently, IWM trades above the range.
