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

Posted on Dec 29, 2008 by in Letters

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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