Dow betwixt and between–betwixt surreal and reality

Posted on Dec 06, 2008 by in Letters

Watching the Dow blast up 250+ points on the day the government announces that the administration (We suppose they did it. Someone must be to blame.) pulverized over 500,000 more jobs leaves us between Lewis Carrol’s mirror and black hole.  We must be in a bull market atmosphere — or a b.s. atmosphere.  1 in 10 mortgages in trouble, a possible 2MM foreclosures — oh well, time to buy and get back to business.  We’re at a loss to imagine who we’re going to sell things to if everyone is out on the corner trying to sell us apples.  Ignore all this.  It’s called economic analysis.  Keep your eye on the chart and be willing to abandon your short positions when the trend changes.  Any probability of that?  Probably not.

The Dow spent the week making inside bars to Monday’s bungee drop.  That should mean we’ll have some fireworks next week — or in the next 10 days.  

Here’s some technical stuff, Basis S&P, the Indu is virtually identical.  Use this carefully.  It is always unwise to gather evidence to support an analysis or position.  Downwave started 10/11/07 at 1576.09.  Operating low  11/21/08 741.02.  Points: 835.07 Duration 408 days 52.98%

Present downwave within major downwave: started 10/14/08 1044.31 Operating low 741.02.  Points: 303.29 Duration 39 days. 29.04%

Present wave status: upwave started 11/21/08 741.02.  As of 12/3/08 + 122.98 points Duration 13 days +16.6%  This wave is unresolved as is the reaction started Monday.

Since the trend ends to continue we can expect more indecision within this little rally, then some fireworks. Ordinarily we would expect the upwave to carry on a bit, but the bungee day and these inside days make the next direction a toss up. The weight of the statistics above is heavily down, but the trend can change anytime.    

So go out and sell a lot of stuff.  The bear party is still on. (Irony.  If we told you to go out and shoot yourself, would you?  Or would you say — oh that Bassetti is such a card.  Always playing Russian roulette for fun.  

On the other hand, why not sell some OIL? (Not a joke.) Buy some dollar (UUP).  Never too low.  Never too high.

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