The reason you honor stops is so that you don’t wind up owning Enron at 1/16. You never know till later whether you did the right thing. You only know that you did the disciplined technical analysis thing. It doesn’t work every time, but it’s still the right thing to do as thousands of charts have shown. With lower lows, broken trend lines and two (at least) important short basing points the likelihood is that the Dow is headed lower. At this point all the important trend lines are broken.
Meanwhile the 10 years (IEF) plays with our emotions. (But doesn’t play well with others.) Recent buy signals are marked. But the top here is at best ambiguous. Two days of what might be taken as bullish at the top if you were just watching closes. But what actually look like a reversal. Then a drop then a reaffirmed buy signal (know in the trade as the Bernanke signal). Only traders should be worrying about this. Investors should be long.
Has google hit the wall. Here is a clear sell signal. Fundamentally (as if we ever looked at fundamentals like earnings and other thimblerigs) overbought and over extended it might be time to cock an ear and see if the fat lady is singing.
Here is a close up of the top. We probably wouldn’t vote against google i.e. by shorting it. But we would bet on the lemmings and sheep on Wall Street who may have just got off the bus. But if we had a position in GOOG (we don’t) we’d either be out of shedding shares.
Yet another buy signal (though weaker) in GLD. $1000 gold? Remember where you heard it, but you don’t have to tell your friends where you heard it — you can smile modestly and say, oh yes everyone knew gold would go through the roof.We’re not wild about this signal but at the worst you lose a little money if you take it, and considering how much you have made in gold it’s less than a latte.
This is beginning to look constructive in the dollar. All things come to an end, including the fall of the dollar.One of the best ways to tell major reversal points is if the media start moaning about the death of the dollar. Those are cover stories for the liquidation of short positions.
The week wouldn’t really feel complete unless we abused, satirized, or savaged someone. Problem is there are so many targets. The recession dogs and their politicians — with their bogus stimulus package. $30 B wall street bonuses while thousands of chumps take the foreclosure walk. It may not be a depression but it’s depressing. Cheer up. Get short and take their money. Bon Chance, Sarkozy. Vive la France. Vive l’amour.