Technical Analysis of Stock Trends

Every 44 has a silver lining

Posted on May 09, 2009 by WHC Bassetti.

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44?

Posted on May 07, 2009 by WHC Bassetti.

The present wave in the SPX (and the other indices) has now carried 44 days and gained 39% from the bottom.  It is Thursday and tomorrow is Friday.  That might seem obvious but think about it.  What happens on Friday?  Often bad things.  The indices are approaching the previous neckline and the 200 day moving average is looming up there as a wall of resistance.  We wouldn’t be surprised to see some fireworks as traders rush for the chairs when the music stops.  Is this general paranoia?  Or is it justified, rational paranoia?  Whichever, we would be ready to spring and get some shorts back on.  A downwave is due.  How violent it will be is open to question.  Other random facts and observations might be of interest — the downwave which preceded this upwave was 44 days long.  This upwave has almost carried to the upper neckline and a downwave here might set up massive Kilroy (H&S) bottom we have been conjecturing.  That would take some months to complete but could set the stage for some sort of bull market.  The economic stage is hardly set for a bull market.  Congress, bought and paid for by the special interests, (The scandal is not what is illegal as someone said.  The scandal is what is legal.) quashed the bankruptcy bill which would have allowed judges to reset mortgages in court.  There is an enormous iceberg of mortgages about to hit the fan, and this pleasant intreval of a atotally technical rally may be about to become a golden memory and we can get back to feasting on bull steaks.

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More betrayal of principles and discipline

Posted on May 04, 2009 by WHC Bassetti.

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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Commodities come calling

Posted on May 03, 2009 by WHC Bassetti.

Looks like buy signals in MOO and DBA.  Has to happen.

The 200 day moving average bears watching here.  Better watching it than watching bears.

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And now for something completely different

Posted on May 03, 2009 by WHC Bassetti.

Watch closely.  You’re about to see something rarely seen among professionals.  You have heard approximately 10,000 times the 11th commandment:  Never move your stops down (up) after they’re set.  Be disciplined and allow the market to take you out.  Then of course there is Emerson (Thoreau?):  ”A foolish consistency is the hobgoblin of small minds.”  To make a long story short we are moving our stop away from the market in the SPX.  

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