It may be too early to say so, but it appears that the sideways drift in the major indices may qualify as a sidewave, thus replacing the anticipated downwave. The muted reaction to the election results and to Fed announcements just confirms what we already knew — that the election was totally discounted by the market. Now it will have to find something else to discount. Or some news excuse to break out of this narrow range.
Nonetheless we opine that the low of 10/19, 1159.71, may be taken as a Basing Point, and a conservative stop would be 5% down, or 1101.72.
This is of course a market indicator — if the SPX took a dive we would have to examine all our positions.
We have been long the euro (FXE) for sometime. This appears to be a buy signal to end the little downwave — or consolidation which has occurred here.
We bought some personally and we also bought some Qs, because we made a trading mistake when we sold our Qs at the same time we sold our SPX position. As we have said 4000 times trend followers always outsmart traders in the long run.
As for the IPO of General Motors we plan to put on a small position and see what happens. If it behaves well we will pitch in more. This is not a technical buy. It is the results of economic judgment. With all its problems GM represents an enormous reservoir of knowledge and experience. It’s difficult for us to imagine a US car industry 5 years from now with only one US maker (forget Chrysler). But we’re not going to be stupid. If it plunges we’ll sell it and wait till we get a buy signal to get back in.