Archive for December, 2008

Hanging man? Hanging around for what? State of the Dow.

Posted on Dec 29, 2008 by .

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We are now into the 19th trading day from the December 1st long day.  And there is not one day away, or completely outside its range.  This is ominous.  The extreme shrinkage in range and volatility will undoubtedly be followed by some violence.  (When the real traders get back from the Hamptons.)  On the other hand maybe the real traders don’t have any ammunition left because all of their investors have demanded their money back.  One of our clever colleagues said that a hedge fund was an (extravagant) compensation scheme disguised as an investment strategy.  Whatever.  Our readers will note that in this range bound period two Candidate basing Point days have appeared.  If you wanted to tighten your stops up you could drop your stops to 5% over one of these points.  We still like the farther stop identified on the chart.    In this time of great uncertainty we see no reason for not finding some likely longs and making light commitments with well placed stops.  For instance T, which we will look at a little later this week.  

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Playing with fire. Or of human bonds.

Posted on Dec 29, 2008 by .

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We remarked that the bond chart got our short glands hyperventilating.  We shorted the bonds but didn’t really give a good accounting of the analysis.  Here is a chart with the analysis.  Now there is something going on here that the intelligent reader should consider.  (We consider all our readers intelligent readers. After all you could be off listening to the analyst (?) who predicted Dow 16,000.)  That is the nature of risk.  Risk inverts at major turning points.  In other words after a panic sell off the risk has been drained from the market.  Wykoff said that he often looked for the point of maximum danger to buy.  In these cases the stops are obvious if you are wrong.  In this case of the bonds the chart is clear, the curve is parabolic and there is a gap which may well be an exhaustion gap.  Now, you can be wrong.  It can go higher, just at a panic sell off can be followed by another panic sell off.  But your stop should take you out in that case.

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Playing with fire around the Xmas tree.

Posted on Dec 21, 2008 by .

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Occasionally we feel like busting out of our three piece grey flannel suit and doing something wild.  Sometimes we catch the tree on fire.  Sometimes we burn the house down.  For our Christmas folly this year we looked at the chart in the bonds and said, hmm, that looks like the Case-Shiller chart of real estate and the tulip bulb chart, which of course it does look like.  

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Strategies for good little investors from Santa Guru

Posted on Dec 21, 2008 by .

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Strategies, December 2008—January2009

December 21, 2008

We have laughed at the foolishness of analysts who are rushing to make forecasts as to the likely next phase of the market.  Now it is time to put our own faces into the van Allen belt of flying eggs – but in an entirely different way. (Please don’t laugh.  We take this seriously.) 

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