Archive for October, 2008

Trouble and strife. Catch a falling knife? Not on your life.

Posted on Oct 08, 2008 by WHC Bassetti.

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Hundreds, if not thousands –perhaps even millions– of traders, investors and technicians are waiting eagerly on the sidelines like the boomer sooners of the Oklahoma land rush hoping to catch the bottom of the panic. This is known in the trade as catching the falling knife. It is not a recommended strategy (what is the difference between a tactic and a strategy? as John McCain would say).

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Market shows contempt for Congressional action. We show Contempt of Congress.

Posted on Oct 03, 2008 by WHC Bassetti.

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Today, Friday October 3 2008 the House of Representatives finally passed the (take your pick) Wall Street Bailout bill, Pig with Lipstick bill, Pig in a Poke bill, Bank Rescue bill, Pork and tax cat bill, Secretary of the Treasure permission to steal and mess around bill, Bush Administration Swan Song bill, the Reverse Robin Hood bill (rob from taxpayer, give to bank)….  You get the idea.  So did the market which basically urinated on Congress and did what we recently said it would do — tested the recent panic low:

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435 Neros fiddle while the economy smolders, about to burst into flame

Posted on Oct 01, 2008 by WHC Bassetti.

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In a long (long) career in the markets in which we have experienced many crashes and dramatic market moves we have just lived through a week to remember. This week an almost 800 point drop followed by an almost 500 point recovery. And you know what? No new lessons. There is nothing here for the technician or experienced investor that has not happened many times before. The old worn lessons of the past are reinforced, and the old worn principles of technical analysis are shown to work once again. Magee method investors have been short the Dow all year. So they watch with interest as the “others” (“they”) run frantically around like characters in a Breughel painting. (Garden of Earthly Delights) And, as Rome smolders threatening to catch fire, 435 Neros in the House of Representatives fiddle and pout and stand on their ideological principals. If it were a comedy we would laugh our heads off. But it’s not. It’s a tragi-comedy. Amazingly the half of the traders in the world (or one tenth) who are not being bashed to pieces are lusting to catch the bottom and go long the market. Speaking of the Bonfire of the Vanities. Dear readers do not panic, either way. Technicians WAIT for the bottom to clearly manifest itself. (Remember Enron?) There is no sign of a bottom. Capitualtion is a dish best eaten cold.

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