The Chart I'm Bottom Fishing

My Bottom Fishing Checklist

Jesse Livermore once said there’s a time to go long, a time to go short and a time to fish.

Like most great quotes, it’s repeated more than it’s respected.

Sitting tight doesn’t drive clicks. Doesn’t sell ads. Doesn’t spark engagement.

But that’s exactly where we are.

No edge. No urgency. Time to fish.

The market’s taking a well-earned breather after a strong run.

As my friends at Carson Research noted..it was the best May in 35 years.

Shorter term - still above all key support levels with price consolidating in a range.

A Well Earned Breather ABOVE Key Support

Zooming out, the “Opportunity In Chaos” played out well.

Price is consolidating within a 3 week range with RSI above 50 and the $VIX ( ▼ 6.76% ) below 20.

Volatile headlines, calm tape. That’s what quiet strength looks like in bull markets.

Volatile Headlines - Quiet Price Action

So while the headlines beg you to act, the charts are telling us something else: respect the trend and enjoy the summer.

It’s time to fish.

Yeah, I get it.

I just said it’s time to take a breather and now here I am tossing a line out.

Welcome to market nuance.

While the S&P consolidates and we sit tight, other corners of the market are just starting to shape up.

This week? I’m bottom fishing.

Yep.

I’m taking a shot at a sector that’s been the ocean floor of performance…..bonds.

They’ve been a total turd. Let’s not sugarcoat it.

And yeah, bottom fishing is messy.

As they say: “Try picking bottoms often ends with stinky fingers.”

But here’s the truth: if you have a system and defined risk, any trade is fair game.

I’m not guessing.

There’s a method to the madness.

A system that limits downside and spots the start of a potential turn.

I only cast the rod when the Bottom Fishing Checklist is set.

Momentum Divergence – Price makes a lower low, but RSI doesn’t.
- This is an early sign of seller exhaustion.
Failed Breakdown – Bears try to push it lower, and bulls snap it back.
- Price confirming the bears may be tired.
Defined Risk/Reward – Clean levels. Clear stops. Upside optionality
- The key to any good system.

Bonds Bottom Fishing Checklist Is Complete

As you can see the $TLT ( ▲ 0.17% ) checks all three boxes, the bait is set.

I’m not betting the boat, just casting a line.

If I come up empty, I lose a worm.

If I’m right, I hook a trend reversal before the crowd shows up.

I can live with this type of Bottom Fishing.

Cue the Most Interesting Man in The World:

Cheers,

Larry Thompson, CMT CPA