Technical Analysis of Stock Trends

Dow coils. Snake market. Getting ready to bite Santa Claus

Posted on Dec 20, 2008 by WHC Bassetti.

Mark Hulbert has recently noted that his best performing newsletters (he doesn’t track this one) are tending bullish, while some good performers are forecasting more downward action.  Which of these forecasts is correct?  Which of these forecasts is wise?  The answer is neither and neither.  It never ceases to amaze us that analysts will endanger their proboscis to flying eggs.  Not that we haven’t had egg on our face frequently, but as the Spanish say, son casos completemente distinctos.  The truth is this:  the market is at the moment sideways and coiling.  The range is tightening and the near term direction is most likely more sideways.  The shortening of range may well result in some fireworks next week.  Next week is amateur week.  The real traders are in the Hamptons, Maine and Aspen for the holidays, so are probably unavailable to deal with any irrational exhuberance either way, up or down.  For most of our readers– investors and trend followers — these largely meaningless forecasts and speculations will be of only passing interest.  Speaking of speculation, which we will in just a New York Minute, we shorted the bonds which we will explain in a later posting.  We will also do some speculating shortly on investment strategies.  For this moment here is the Indu 

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OOPs — so long UUP

Posted on Dec 16, 2008 by WHC Bassetti.

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Naked mud wrestling in Senate. Naked knife fighting in market.

Posted on Dec 13, 2008 by WHC Bassetti.

Of course we’re capitalists.  Of course we’re not deaf dumb and blind capitalists.  Of course we’re not pigs to the trough capitalists, like Phil Gramm — and the companies who evaded all common sense regulation and almost burned down the house.  But the sight of the U.S. Senate arguing about hourly rates of Detroit workers while the Titanic is taking on water inspired us with such disgust and fear and loathing that we wanted to take a scourge and clean out the law making temple.  

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Strictly systematic. Dow Stops. No babbling. No whining.

Posted on Dec 11, 2008 by WHC Bassetti.

We were reading our last letter and wondering if it made any sense to our readers.  We’re not sure it made any sense to us.  So in order to impose some sense on the situation we calculated the stops on the Dow.  These make sense, insofar as sense can be made of these markets.  Remember, it was Keynes who said the markets can remain irrational longer than you can remain solvent.  Funny thing, Keynes is back in fashion, even with neocons.

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Run for the hills. Bulls on the loose.

Posted on Dec 09, 2008 by WHC Bassetti.

Well, maybe.  The upwave that started November 21 just broke away and looks to carry much higher.  We think that shorts should begin hedging by matching their shorts with longs in indices and ETFs.  Depending on how strong you feel the upwave is you might even go fully hedged, or even some % long.  As is obvious we have been nibbling at bottom fish for a little while here and buying lottery tickets. In addition to the major indices Ford and GE (among many others) gave buy signals today.  Now note that a change of trend signal has not occurred.  And in fact we would not be surprised if this wave runs uphill here and exhausts itself when the market realizes that Barak does not walk on water and that the economy far from being watery is quicksand. So this note is for the speculators and adventuresome.  The patient might want to wait for the change of trend signal.    In all our experience we have never seen markets like these.  They virtually make a mockery of systems trading and methodological trading.  Contrarian methods and trading styles and luck rule the day here.  Here is what we expect:  an extended upwave, followed by more bad news which reestablishes the bear market.  There is every possibility that there will be a change of trend signal that will be false.  We are working overtime to psych out these events and readers should check frequently for whatever we invent next.

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