Turbulence — as predicted last Thursday

Posted on Mar 30, 2009 by in Letters

Last Thursday we observed that we expected some days of turbulence.  This has come to pass, with the rally being off 410 points (5%) in two days.  This downdraft in the rally will probably continue, as the very short term momentum is now in line with the long term momentum.  The prospect of tough love from Obama for GM and Chrysler gave the market just the excuse it needed to bail from long trading positions -- as you should have done if you had positions of that kind.  We think the rest of the week will be volatile and probably continue to see price erosion.  In a few days we might know whether the March low is to be tested.  While these appear to be news events we regard them as sub rosa technical, occurring because the rally was too far too fast.  And -- the day was dramatic --with the discharge of Waggoner of GM and the flaunting of the bankruptcy word.  Trading shorts -- of short term duration -- might be put on here, but we would have a very tight stop on them -- today's high plus a smidgeon, or 

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