True, or not true? Trend, or contrarian rally?

Posted on Oct 14, 2010 by in Letters

http://stockcharts.com/h-sc/ui?s=$SPX&p=D&yr=1&mn=0&dy=0&id=p62881197949&a=207879904

Two things are noteworthy about this chart (and the market).  The first is that  May's high has been taken out.  (A note about that noteworthy occurrence:  Magee thought that important trendlines should be pierced by 3% to be definitive. That's why we have Basing Points.  And, we don't  wait for that to increase our positions.  In this case we would hang back and not add on, due to the length of the run without a downwave -- 34 days -- not to mention inchoate suspicion.  Or maybe paranoia.  GLD is 54 days and SLV is 38.  When they give us money like this we get suspicious.)

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