More betrayal of principles and discipline

Posted on May 04, 2009 by in Letters

We capriciously moved the stop away from the market in the S&P.  Of course it is necessary to do that for the Industrials also, as that is our usual picture of the market.  So we have recomputed the stop from the Basing Point in January 09.  The significance of these recomputations is largely theoretical.  That is, the new stop is our analysis of change of trend to bull market.  We consider this largely theoretical in that following the principle of natural hedging and increasing capital commitments in successful trades our readers should be either largely hedged now or perhaps even net long.  The formation here is certainly interesting -- perhaps a bastard Kilroy (H&S) bottom with mutated hands (shoulders).  We remain skeptical.  But.  Note that today's action is a breakout signal.  It could be stronger and following days will prove it valid or not.  There is a measuring implication here.  Measured from top to bottom the formation is 1845+ points deep, which following conventional measuring conventions (yes, we hate them) would give us an objective of 10,160.39. That would take out our stop.  If this appears imminent we will look at the situation again.

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